China's Biodiesel Producers Seek Brand-new Outlets As Hefty EU Tariffs Bite

By Chen Aizhu

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

The EU will impose provisional anti-dumping tasks of in between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 business consisting of leading producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export service that deserved $2.3 billion last year.

Some larger manufacturers are considering the marine fuel market in China and Singapore, the world's leading marine fuel hub, as they look for to balance out currently falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have actually fallen greatly considering that mid-2023 amid investigations. Volumes in the very first 6 months of this year plunged 51% from a year earlier to 567,440 heaps, Chinese customs data showed.

June shipments shrank to just over 50,000 lots, the lowest given that mid-2019, according to customs data.

At their peak, exports to the EU reached a record 1.8 million loads 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 revealed.

Chinese manufacturers of biodiesel have taken pleasure in fat profits in the last few years, making the many of the EU's green energy policy that gives subsidies 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 utilizing ratings of employees processing waste oil collected from millions of Chinese restaurants. Before the biodiesel export boom, they were making lower-value goods like soaps and processing leather products.

However, the boom was brief. The EU began in August last year investigating Indonesian biodiesel that was believed of preventing duties by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced artificially low and undercutting local producers.

Anticipating the tariffs, traders stocked up on utilized cooking oil (UCO), lifting rates of the feedstock, while rates of biodiesel sank in view of shrinking demand for the Chinese supply.

"With large rates of UCO partly supported by strong U.S. and European demand, and free-falling item costs, companies are having a difficult time surviving," said Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a primary kind of biodiesel, have halved versus in 2015's average to the current $1,200 to $1,300 per metric ton and are off a peak of $3,000 in 2022, Shan included.

With low prices, biodiesel plants have cut their operations to a lowest level of under 20% of existing capability usually in July, down from a peak of 50% last seen in early 2023, according to Chinese consultancies Sublime China Information and JLC.

Meanwhile, diminishing biodiesel sales are boosting China's UCO exports, which analysts forecast are set to touch a brand-new high this year. UCO exports soared by two-thirds year-on-year in the first half of 2024 to 1.41 million loads, with the United States, Singapore and the Netherlands the leading locations.

OUTLETS

While numerous smaller sized plants are likely to shutter production indefinitely, bigger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new outlets including the marine fuel market in your home and in the essential center 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 accelerate preparation and structure of sustainable air travel fuel (SAF) plants, executives stated. China is expected to reveal an SAF required before completion of 2024.

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