GitLab

By Chen Aizhu

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

The EU will impose provisionary anti-dumping duties of in between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 companies consisting of leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export organization that deserved $2.3 billion in 2015.

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

Exports to the bloc have actually fallen sharply given that mid-2023 amid examinations. Volumes in the first 6 months of this year plunged 51% from a year previously to 567,440 heaps, Chinese customs data revealed.

June deliveries diminished to simply over 50,000 loads, the most affordable since mid-2019, according to customs data.

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, taking in 84% of China's biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customs figures revealed.

Chinese producers of biodiesel have delighted in fat revenues in recent years, taking advantage of the EU's green energy policy that gives aids to business that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

Much of China's biodiesel producers are privately-run little plants employing ratings of workers processing waste oil collected from countless 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-term. The EU began 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 believed to be priced synthetically low and damaging local manufacturers.

Anticipating the tariffs, traders stocked up on utilized cooking oil (UCO), lifting costs of the feedstock, while prices of biodiesel sank in view of diminishing need for the Chinese supply.

"With hefty prices of UCO partially supported by strong U.S. and European need, and free-falling product prices, business are having a bumpy ride making it through," said Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated veggie oil, or HVO, a main type of biodiesel, have cut in half versus last year's average to the present $1,200 to $1,300 per metric ton 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 capacity usually in July, down from a peak of 50% last seen in early 2023, according to Sublime China Information and JLC.

Meanwhile, diminishing biodiesel sales are improving China's UCO exports, which analysts anticipate are set to touch a new high this year. UCO exports soared by two-thirds year-on-year in the first half of 2024 to 1.41 million lots, with the United States, Singapore and the Netherlands the top locations.

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 outlets consisting of the marine fuel market in the house and in the important center of Singapore, which is utilizing more biodiesel for ship fuel mixing, according to the biofuel executives.

One of the producers, Longyan Zhuoyue, concurred 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 stated. China is anticipated to announce an SAF mandate before completion of 2024.

They have also been scouting for 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 authorities included.

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