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

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 buyer, dries up ahead of anti-dumping tariffs, biofuel executives and analysts stated.

The EU will enforce provisional anti-dumping tasks of between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 companies including leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export organization that was worth $2.3 billion in 2015.

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

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

June shipments diminished to just over 50,000 tons, the most affordable because mid-2019, according to customs 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, taking in 84% of China's biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customs figures showed.

Chinese manufacturers of biodiesel have delighted in fat revenues in current years, maximizing the EU's green energy policy that grants aids to business that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

A lot of China's biodiesel producers are privately-run little plants utilizing scores of workers processing waste oil gathered from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value goods like soaps and processing leather items.

However, the boom was brief. The EU began in August in 2015 investigating Indonesian biodiesel that was thought of circumventing duties 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 regional producers.

Anticipating the tariffs, traders stocked up on used cooking oil (UCO), raising prices of the feedstock, while rates 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 costs, 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 primary kind of biodiesel, have actually cut in half versus in 2015'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 cut their operations to an all-time low of under 20% of existing capability typically 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 very first half of 2024 to 1.41 million heaps, with the United States, Singapore and the Netherlands the leading locations.

OUTLETS

While many smaller sized plants are likely to shutter production indefinitely, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets including the marine fuel market at home and in the important center 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 use more biodiesel in marine fuel.

Companies would also accelerate planning and building of sustainable aviation fuel (SAF) plants, executives stated. China is expected to announce an SAF mandate before completion of 2024.

They have actually likewise been scouting for brand-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 added.

(Reporting by Chen Aizhu