By Chen Aizhu
SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel producers 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 buyer, dries up ahead of anti-dumping tariffs, biofuel executives and analysts stated.
The EU will impose provisionary anti-dumping responsibilities of in between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 companies including leading producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export business that deserved $2.3 billion last year.
Some larger manufacturers 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 dramatically considering that mid-2023 amidst examinations. Volumes in the first 6 months of this year plunged 51% from a year previously to 567,440 tons, Chinese customizeds information revealed.
June deliveries diminished to just over 50,000 heaps, the most affordable since mid-2019, according to custom-mades 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 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 manufacturers of biodiesel have taken pleasure in fat revenues in the last few years, taking advantage of the EU's green energy policy that grants subsidies to companies that are utilizing biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.
Much of China's biodiesel manufacturers are privately-run small scores of employees processing waste oil collected 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 started in August last year investigating Indonesian biodiesel that was suspected of circumventing responsibilities by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced synthetically low and damaging regional producers.
Anticipating the tariffs, traders stockpiled on used cooking oil (UCO), lifting rates of the feedstock, while costs of biodiesel sank in view of diminishing need for the Chinese supply.
"With hefty rates of UCO partially supported by strong U.S. and European need, and free-falling item costs, business are having a tough time making it through," stated Gary Shan, primary marketing officer of Henan Junheng.
Prices of hydrotreated grease, or HVO, a primary kind of biodiesel, have halved 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 added.
With low rates, biodiesel plants have cut their operations to an all-time low of under 20% of existing capability typically 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 analysts predict are set to touch a brand-new high this year. UCO exports soared 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 destinations.
OUTLETS
While many smaller plants are most likely to shutter production forever, bigger producers 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 center of Singapore, which is utilizing more biodiesel for ship fuel mixing, 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 also accelerate preparation and structure of sustainable air travel fuel (SAF) plants, executives said. China is expected to announce an SAF mandate before completion of 2024.
They have actually also 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 officials included.
(Reporting by Chen Aizhu
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China's Biodiesel Producers Seek Brand new Outlets As Hefty EU Tariffs Bite
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