China’s Biodiesel Producers Seek new Outlets As Hefty EU Tariffs Bite

By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) – Chinese biodiesel producers are looking for new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their greatest buyer, dries up ahead of anti-dumping tariffs, biofuel executives and experts said.

The EU will enforce provisionary anti-dumping responsibilities of between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 business including leading producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export company that was worth $2.3 billion last year.

Some larger producers are considering the marine fuel market in China and Singapore, the world’s top marine fuel hub, as they seek to balance out already falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have actually fallen dramatically given that mid-2023 amidst investigations. Volumes in the first 6 months of this year plunged 51% from a year earlier to 567,440 loads, Chinese customizeds data revealed.

June shipments shrank to just over 50,000 tons, the least expensive because mid-2019, according to customs information.

At their peak, exports to the EU reached a record 1.8 million tons in 2023, representing 90% of all Chinese biodiesel exports that year. The Netherlands was the leading importer in 2023, soaking in 84% of China’s biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customizeds figures showed.

Chinese producers of biodiesel have enjoyed fat profits in the last few years, making the most of the EU’s green energy policy that approves aids to companies that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

Much of China’s biodiesel manufacturers are privately-run small plants employing ratings of employees processing waste oil collected from countless Chinese dining establishments. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather products.

However, the boom was short-term. The EU started in August last year examining Indonesian biodiesel that was presumed of preventing responsibilities by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced synthetically low and undercutting regional producers.

Anticipating the tariffs, traders stockpiled on utilized cooking oil (UCO), raising rates of the feedstock, while rates of biodiesel sank in view of diminishing need for the Chinese supply.

“With substantial rates of UCO partly supported by strong U.S. and European need, and free-falling product prices, companies are having a bumpy ride surviving,” stated Gary Shan, chief marketing of Henan Junheng.

Prices of hydrotreated grease, or HVO, a main kind of biodiesel, have actually cut in half versus in 2015’s average to the present $1,200 to $1,300 per metric lot and are off a peak of $3,000 in 2022, Shan included.

With low prices, biodiesel plants have actually cut their operations to an all-time low of under 20% of existing capacity on average in July, below a peak of 50% last seen in early 2023, according to Chinese consultancies Sublime China Information and JLC.

Meanwhile, shrinking biodiesel sales are increasing China’s UCO exports, which analysts forecast are set to touch a brand-new high this year. UCO exports skyrocketed by two-thirds year-on-year in the first half of 2024 to 1.41 million lots, with the United States, Singapore and the Netherlands the top destinations.

OUTLETS

While lots of smaller sized plants are likely to shutter production forever, bigger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out brand-new outlets consisting of the marine fuel market at home and in the important hub of Singapore, which is utilizing more biodiesel for ship fuel mixing, according to the biofuel executives.

Among the manufacturers, Longyan Zhuoyue, concurred in January with COSCO Shipping to use more biodiesel in marine fuel.

Companies would also speed up planning and structure of sustainable air travel fuel (SAF) plants, executives stated. China is anticipated to announce an SAF required before completion of 2024.

They have likewise been hunting for brand-new biodiesel customers outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are local mandates for the alternative fuel, the authorities added.

(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)