GitLab

By Chen Aizhu

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

The EU will impose provisionary anti-dumping duties of in between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 business 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 considering the marine in China and Singapore, the world's leading marine fuel center, as they look for to balance out already falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have actually fallen greatly given that mid-2023 amidst examinations. Volumes in the very first six months of this year plunged 51% from a year earlier to 567,440 loads, Chinese customizeds information showed.

June shipments shrank to simply over 50,000 heaps, the lowest considering that mid-2019, according to customs data.

At their peak, exports to the EU reached a record 1.8 million lots in 2023, representing 90% of all Chinese biodiesel exports that year. The Netherlands was the top importer in 2023, taking 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 delighted in fat profits recently, taking advantage of the EU's green energy policy that approves subsidies to companies that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

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

However, the boom was short-lived. The EU began in August in 2015 investigating Indonesian biodiesel that was thought of circumventing 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 regional manufacturers.

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

"With hefty prices of UCO partially supported by strong U.S. and European demand, and free-falling item costs, companies are having a difficult time enduring," said Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated vegetable oil, or HVO, a primary type of biodiesel, have halved versus last year's average to the current $1,200 to $1,300 per metric heap and are off a peak of $3,000 in 2022, Shan added.

With low costs, biodiesel plants have actually cut their operations to an all-time low of under 20% of existing capacity 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 boosting 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 very first half of 2024 to 1.41 million tons, with the United States, Singapore and the Netherlands the top destinations.

OUTLETS

While many smaller sized plants are likely to shutter production indefinitely, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new outlets including the marine fuel market in your home and in the important hub of Singapore, which is utilizing more biodiesel for ship fuel mixing, according to the biofuel executives.

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

Companies would also speed up planning and building of sustainable aviation fuel (SAF) plants, executives stated. China is expected to reveal an SAF mandate before the end of 2024.

They have actually likewise been searching for new biodiesel customers outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are regional requireds for the alternative fuel, the authorities added.

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