China’s Biodiesel Producers Seek 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 most significant buyer, dries up ahead of anti-dumping tariffs, biofuel executives and experts said.

The EU will enforce provisionary anti-dumping tasks of between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 companies including leading producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export service that was worth $2.3 billion in 2015.

Some bigger producers are considering the marine fuel market in China and Singapore, the world’s leading marine fuel center, as they look for to balance out currently falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have actually fallen sharply given that mid-2023 in the middle of examinations. Volumes in the very first six months of this year plunged 51% from a year earlier to 567,440 loads, Chinese customs data showed.

June deliveries shrank to just over 50,000 heaps, the lowest considering 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, taking in 84% of China’s biodiesel deliveries to the EU, followed by Belgium and Spain, Chinese customizeds figures revealed.

Chinese producers of biodiesel have actually enjoyed fat earnings in current years, maximizing the EU’s green energy policy that gives subsidies to business that are using biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.

Much of China’s biodiesel manufacturers are privately-run small plants employing scores of workers processing waste oil gathered from millions of Chinese restaurants. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather products.

However, the boom was brief. The EU started in August last year examining Indonesian biodiesel that was presumed of circumventing duties 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 local manufacturers.

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

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

Prices of hydrotreated vegetable oil, or HVO, a main kind of biodiesel, have actually cut in half versus last year’s average to the current $1,200 to $1,300 per metric load and are off a peak of $3,000 in 2022, Shan included.

With low rates, biodiesel plants have actually cut their operations to a of under 20% of existing capacity 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 enhancing 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 very first half of 2024 to 1.41 million tons, with the United States, Singapore and the Netherlands the top locations.

OUTLETS

While many smaller sized plants are most likely to shutter production indefinitely, 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 center of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.

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

Companies would likewise speed up preparation and building of sustainable air travel fuel (SAF) plants, executives stated. China is expected to reveal an SAF required before completion of 2024.

They have actually 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 authorities added.

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