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

By Chen Aizhu

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

The EU will impose provisional anti-dumping tasks of 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 service that deserved $2.3 billion last year.

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

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

June shipments diminished to just over 50,000 tons, the most affordable considering that mid-2019, according to customizeds data.

At their peak, exports to the EU reached a record 1.8 million heaps 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 custom-mades figures showed.

Chinese producers of biodiesel have actually enjoyed fat earnings in the last few years, making the many of the EU's green energy policy that gives aids to business that are utilizing biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.

A number of China's biodiesel manufacturers are privately-run little plants employing ratings of employees processing waste oil collected from countless Chinese dining establishments. Before the biodiesel export boom, they were making lower-value products like soaps and processing leather products.

However, the boom was brief. The EU began in August in 2015 examining Indonesian biodiesel that was presumed of preventing responsibilities by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced artificially low and undercutting local producers.

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

"With significant costs of UCO partly supported by strong U.S. and European need, and free-falling product prices, 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 type of biodiesel, have actually halved versus last year's average to the present $1,200 to $1,300 per metric lot and are off a peak of $3,000 in 2022, Shan included.

With low prices, biodiesel plants have actually cut their operations to a lowest level of under 20% of existing capability usually in July, below 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 new high this year. UCO exports skyrocketed by two-thirds year-on-year in the first half of 2024 to 1.41 million heaps, with the United States, and the Netherlands the leading destinations.

OUTLETS

While numerous smaller sized plants are likely to shutter production indefinitely, larger producers 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 crucial hub of Singapore, which is using more biodiesel for ship fuel blending, 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 planning 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 actually 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)