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

The EU will enforce provisionary anti-dumping tasks of in between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 companies consisting of leading manufacturers Zhejiang Jiaao, and Longyan Zhuoyue Group in an export business that deserved $2.3 billion last year.

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

Exports to the bloc have fallen sharply because mid-2023 amidst examinations. Volumes in the first 6 months of this year plunged 51% from a year earlier to 567,440 loads, Chinese custom-mades data showed.

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

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, soaking in 84% of China's biodiesel deliveries to the EU, followed by Belgium and Spain, Chinese customs figures showed.

Chinese producers of biodiesel have actually delighted in fat profits recently, taking advantage of the EU's green energy policy that gives subsidies to business that are using biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.

Much of China's biodiesel manufacturers are privately-run little plants using ratings of employees processing waste oil collected from countless Chinese dining establishments. Before the biodiesel export boom, they were making lower-value goods like soaps and processing leather products.

However, the boom was brief. The EU began in August last year examining Indonesian biodiesel that was suspected of preventing tasks by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced artificially low and damaging local producers.

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

"With substantial rates of UCO partially supported by strong U.S. and European need, and free-falling item prices, companies 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 type of biodiesel, have actually cut in half versus last year's average to the current $1,200 to $1,300 per metric load and are off a peak of $3,000 in 2022, Shan included.

With low prices, biodiesel plants have actually cut their operations to an all-time low of under 20% of existing capacity 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 experts predict 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 lots, with the United States, Singapore and the Netherlands the top destinations.

OUTLETS

While lots of smaller sized plants are most likely to shutter production indefinitely, larger 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 crucial center of Singapore, which is utilizing more biodiesel for ship fuel blending, according to the biofuel executives.

One of the manufacturers, Longyan Zhuoyue, concurred in January with COSCO Shipping to utilize more biodiesel in marine fuel.

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

They have 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 included.

(Reporting by Chen Aizhu