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

By Chen Aizhu

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

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

Some bigger manufacturers are eyeing the marine fuel market in China and Singapore, the world’s top marine fuel hub, as they look for to balance out currently falling biodiesel exports to the EU, biofuel executives stated.

Exports to the bloc have actually fallen greatly considering 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 showed.

June deliveries diminished to simply over 50,000 lots, the lowest considering that mid-2019, according to custom-mades 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 top importer in 2023, soaking in 84% of China’s biodiesel deliveries to the EU, followed by Belgium and Spain, Chinese customizeds figures showed.

Chinese producers of biodiesel have actually enjoyed fat earnings over the last few years, making the most of the EU’s green energy policy that approves subsidies to business that are using biodiesel as a fuel such as Repsol, Shell and Neste.

A lot of China’s biodiesel manufacturers are privately-run little plants employing scores of employees processing waste oil collected from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value products like soaps and processing leather items.

However, the boom was temporary. The EU began in August in 2015 investigating Indonesian biodiesel that was suspected of preventing tasks by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced synthetically low and damaging regional manufacturers.

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

“With substantial costs of UCO partially supported by strong U.S. and European demand, and free-falling product costs, companies are having a difficult time enduring,” stated Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a main type of biodiesel, have cut in half versus last year’s average to the present $1,200 to $1,300 per metric load and are off a peak of $3,000 in 2022, Shan added.

With low costs, biodiesel plants have actually cut their operations to a lowest level of under 20% of existing capability on average 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 improving China’s UCO exports, which analysts anticipate 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 lots of smaller sized plants are likely to shutter production forever, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets including the marine fuel market in your home and in the crucial hub of Singapore, which is using more biodiesel for ship fuel blending, according to the biofuel executives.

One of the producers, Longyan Zhuoyue, agreed in January with COSCO Shipping to use more biodiesel in marine fuel.

Companies would likewise speed up preparation and building of sustainable aviation fuel (SAF) plants, executives said. China is expected to announce an SAF required before the end of 2024.

They have also been hunting for brand-new biodiesel customers outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are regional requireds for the alternative fuel, the officials included.

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