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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 exploring producing other biofuels as supply to the European Union, their greatest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and analysts stated.

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

Some larger manufacturers are considering the marine fuel market in China and Singapore, the world's top marine fuel hub, as they seek to balance out already falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have fallen sharply given that mid-2023 in the middle of examinations. Volumes in the first six months of this year plunged 51% from a year earlier to 567,440 lots, Chinese customs information revealed.

June deliveries shrank to simply over 50,000 heaps, the most affordable considering that mid-2019, according to custom-mades 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 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 producers of biodiesel have actually enjoyed fat profits in the last few years, taking advantage of the EU's green energy policy that gives aids to companies that are using biodiesel as a sustainable transportation 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 collected from countless Chinese dining establishments. Before the biodiesel export boom, they were making lower-value products like soaps and processing leather items.

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

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

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

Prices of hydrotreated grease, or HVO, a main kind of biodiesel, have cut in half versus in 2015's average to the existing $1,200 to $1,300 per metric load and are off a peak of $3,000 in 2022, Shan added.

With low costs, biodiesel plants have cut their operations to a lowest level 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, shrinking biodiesel sales are increasing China's UCO exports, which experts 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 heaps, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

While lots of 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 in your home and in the important hub of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.

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

would likewise accelerate planning and building of sustainable air travel fuel (SAF) plants, executives said. China is anticipated to reveal an SAF required before the end of 2024.

They have likewise been hunting for new biodiesel clients outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are regional mandates for the alternative fuel, the authorities included.

(Reporting by Chen Aizhu