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 checking out producing other biofuels as supply to the European Union, their greatest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and experts stated.

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

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

Exports to the bloc have fallen greatly since mid-2023 amid investigations. Volumes in the very first 6 months of this year plunged 51% from a year previously to 567,440 tons, Chinese customizeds data showed.

June deliveries diminished to simply over 50,000 heaps, the most affordable 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 leading importer in 2023, soaking in 84% of China’s biodiesel deliveries to the EU, followed by Belgium and Spain, Chinese custom-mades figures revealed.

Chinese manufacturers of biodiesel have taken pleasure in fat revenues in the last few years, maximizing the EU’s green energy policy that gives subsidies to business that are utilizing biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.

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

However, the boom was short-lived. The EU began in August in 2015 investigating Indonesian biodiesel that was thought of circumventing duties by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced artificially low and damaging regional manufacturers.

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

“With significant rates of UCO partially supported by strong U.S. and European need, and free-falling product costs, companies are having a hard time making it through,” stated Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated veggie oil, or HVO, a primary kind of biodiesel, have cut in half versus in 2015’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 costs, biodiesel plants have cut their operations to a lowest level of under 20% of existing capability typically in July, down from a peak of 50% last seen in early 2023, according to Chinese consultancies Sublime China Information and JLC.

Meanwhile, shrinking biodiesel sales are enhancing China’s UCO exports, which analysts predict 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 loads, with the United States, Singapore and the Netherlands the leading locations.

OUTLETS

While lots of smaller plants are likely to shutter production indefinitely, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out brand-new outlets including the marine fuel market in the house and in the important hub of Singapore, which is using more biodiesel for ship fuel blending, according to the .

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

Companies would also speed up preparation and building of sustainable air travel fuel (SAF) plants, executives stated. China is expected to announce an SAF required before completion 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 local mandates for the alternative fuel, the authorities added.

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