China s Biodiesel Producers Seek New Outlets As Hefty EU Tariffs Bite

By Chen Aizhu


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


The EU will enforce provisional anti-dumping duties 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 company that deserved $2.3 billion in 2015.


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 dramatically since mid-2023 in the middle of investigations. Volumes in the very first six months of this year plunged 51% from a year previously to 567,440 heaps, Chinese custom-mades data revealed.


June deliveries diminished to just over 50,000 loads, the least expensive considering that mid-2019, according to custom-mades 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 top importer in 2023, soaking in 84% of China's biodiesel deliveries to the EU, followed by Belgium and Spain, Chinese custom-mades figures showed.


Chinese manufacturers of biodiesel have actually enjoyed fat revenues over the last few years, taking advantage of the EU's green energy policy that gives subsidies to companies that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.


A lot of China's biodiesel manufacturers are privately-run small plants employing ratings of employees processing waste oil gathered from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value products like soaps and processing leather products.


However, the boom was temporary. The EU began in August last year investigating Indonesian biodiesel that was presumed of preventing responsibilities 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 equipped up on utilized cooking oil (UCO), raising rates of the feedstock, while costs of biodiesel sank in view of shrinking demand for the Chinese supply.


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


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


With low rates, biodiesel plants have 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 Chinese consultancies Sublime China Information and JLC.


Meanwhile, shrinking biodiesel sales are enhancing China's UCO exports, which experts anticipate are set to touch a new high this year. UCO exports soared by in the very 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 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 essential hub 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 accelerate planning and structure of sustainable aviation fuel (SAF) plants, executives said. China is expected to reveal an SAF required before completion of 2024.


They have likewise been searching for brand-new biodiesel customers outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are local requireds for the alternative fuel, the officials included.


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