GitLab

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 most significant purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and experts stated.

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

Some bigger producers are eyeing the marine fuel market in China and Singapore, the world's leading marine fuel center, as they seek to balance out already falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have actually fallen sharply since mid-2023 amidst investigations. Volumes in the first 6 months of this year plunged 51% from a year previously to 567,440 tons, Chinese customs information revealed.

June deliveries shrank to just over 50,000 loads, 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 customs figures showed.

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

Many of China's biodiesel producers are privately-run little plants using ratings of workers processing waste oil collected from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather products.

However, the boom was temporary. The EU started in August in 2015 investigating Indonesian biodiesel that was presumed of circumventing 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 local manufacturers.

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

"With substantial costs of UCO partly supported by strong U.S. and European demand, and free-falling item rates, business are having a difficult time making it through," said Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated vegetable oil, or HVO, a main type of biodiesel, have actually cut in half 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 actually cut their operations to an all-time low of under 20% of existing capacity usually in July, below 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 experts predict are set to touch a new high this year. UCO exports soared 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 leading destinations.

OUTLETS

While many smaller sized plants are most likely to shutter production forever, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out brand-new outlets consisting of the marine fuel market in the house and in the crucial center of Singapore, which is utilizing more biodiesel for ship fuel blending, according to the biofuel executives.

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

Companies would likewise speed up preparation and structure of sustainable aviation fuel (SAF) plants, . China is anticipated to announce an SAF required before completion of 2024.

They have likewise been scouting for brand-new biodiesel clients 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)