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1 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 brand-new outlets in Asia for their exports and exploring producing other biofuels as supply to the European Union, their greatest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and analysts said.

The EU will enforce 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 company that was worth $2.3 billion in 2015.

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

Exports to the bloc have fallen dramatically since mid-2023 in the middle of investigations. Volumes in the first 6 months of this year plunged 51% from a year previously to 567,440 heaps, Chinese customs data showed.

June shipments diminished to simply over 50,000 lots, the most affordable because mid-2019, according to custom-mades 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, soaking in 84% of China's biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customizeds figures showed.

Chinese manufacturers of biodiesel have actually taken pleasure in fat profits over the last few years, taking advantage of the EU's green energy policy that approves aids to companies that are utilizing biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.

Many of China's biodiesel producers are privately-run little plants using scores of employees 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 short-lived. The EU started in August last year examining Indonesian biodiesel that was presumed of preventing tasks 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 local manufacturers.

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

"With substantial prices of UCO partly supported by strong U.S. and European need, and free-falling item rates, companies are having a bumpy ride surviving," said Gary Shan, chief marketing officer of Henan Junheng.

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

With low costs, biodiesel plants have actually cut their operations to an all-time low 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, diminishing biodiesel sales are boosting 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 first half of 2024 to 1.41 million tons, with the United States, Singapore and the Netherlands the top destinations.

OUTLETS

While numerous smaller plants are likely to shutter production forever, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring new the marine fuel market at home and in the essential center of Singapore, which is utilizing more biodiesel for ship fuel blending, according to the biofuel executives.

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

Companies would likewise speed up preparation and structure of sustainable aviation fuel (SAF) plants, executives stated. China is anticipated 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 local mandates for the alternative fuel, the officials added.

(Reporting by Chen Aizhu