China's Biodiesel Producers Seek new Outlets As Hefty EU Tariffs Bite
By Chen Aizhu
SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel producers are looking for new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their biggest buyer, dries up ahead of anti-dumping tariffs, biofuel executives and analysts said.
The EU will impose provisionary anti-dumping duties of between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 companies consisting of leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export organization that deserved $2.3 billion last year.
Some bigger manufacturers are eyeing the marine fuel market in China and Singapore, the world's leading marine fuel center, as they seek to offset currently falling biodiesel exports to the EU, biofuel executives said.
Exports to the bloc have fallen sharply because mid-2023 amid examinations. Volumes in the very first six months of this year plunged 51% from a year earlier to 567,440 heaps, Chinese customizeds data revealed.
June shipments diminished to just over 50,000 heaps, the most affordable given that mid-2019, according to customs information.
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 shipments to the EU, followed by Belgium and Spain, Chinese customizeds figures revealed.
Chinese producers of biodiesel have taken pleasure in fat revenues in the last few years, maximizing the EU's green energy policy that approves aids to business that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.
Many of China's biodiesel manufacturers are privately-run small plants utilizing scores of employees processing waste oil gathered from millions of Chinese dining establishments. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather items.
However, the boom was short-lived. The EU started in August in 2015 investigating Indonesian biodiesel that was thought 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 damaging local manufacturers.
Anticipating the tariffs, traders equipped up on utilized cooking oil (UCO), lifting prices of the feedstock, while rates of biodiesel sank in view of shrinking demand for the Chinese supply.
"With hefty prices of UCO partly supported by strong U.S. and European demand, and free-falling product costs, business are having a tough time surviving," said Gary Shan, primary marketing officer of Henan Junheng.
Prices of hydrotreated vegetable oil, or HVO, a primary kind of biodiesel, have halved versus in 2015's average to the present $1,200 to $1,300 per metric lot and are off a peak of $3,000 in 2022, Shan added.
With low rates, biodiesel plants have cut their operations to an all-time low of under 20% of existing capability usually 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 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 first half of 2024 to 1.41 million loads, with the United States, Singapore and the Netherlands the top locations.
OUTLETS
While numerous smaller plants are likely to shutter production forever, bigger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets consisting of the marine fuel market at home and in the essential center 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 utilize more biodiesel in marine fuel.
Companies would also accelerate preparation and structure of sustainable air travel fuel (SAF) plants, executives said. China is anticipated to announce an SAF required before completion of 2024.
They have likewise been searching for new biodiesel customers outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are regional mandates for the alternative fuel, the authorities added.
(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)