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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 manufacturers are looking for brand-new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their greatest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and experts stated.

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

Some larger producers are considering the marine fuel market in China and Singapore, the world's top 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 given that mid-2023 in the middle of examinations. Volumes in the very first 6 months of this year plunged 51% from a year previously to 567,440 tons, Chinese customizeds data showed.

June deliveries shrank to just over 50,000 tons, the most affordable since mid-2019, according to custom-mades information.

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 deliveries to the EU, followed by Belgium and Spain, Chinese customizeds figures showed.

Chinese producers of biodiesel have taken pleasure in fat revenues over the last few years, taking advantage of the EU's green energy policy that grants aids to companies that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

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

However, the boom was short-term. The EU started in August last year investigating Indonesian biodiesel that was believed 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 undercutting regional manufacturers.

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

"With large prices of UCO partially supported by strong U.S. and European need, and free-falling item costs, business are having a bumpy ride surviving," stated Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a main kind of biodiesel, have actually halved 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 added.

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 enhancing China's UCO exports, which experts anticipate are set to touch a new high this year. UCO exports skyrocketed by two-thirds year-on-year in the first half of 2024 to 1.41 million heaps, with the United States, Singapore and the Netherlands the top locations.

OUTLETS

While numerous smaller sized plants are likely to shutter production forever, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets including the marine fuel market in your home and in the essential center of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.

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

Companies would also accelerate planning and structure of sustainable air travel fuel (SAF) plants, executives said. China is expected to reveal an SAF mandate before the end of 2024.

They have also been hunting for new biodiesel customers outside the EU bloc, in Australia, Japan, South Korea and where there are regional mandates for the alternative fuel, the officials added.

(Reporting by Chen Aizhu