China’s Biodiesel Producers Seek new Outlets As Hefty EU Tariffs Bite
By Chen Aizhu
SINGAPORE, Aug 16 (Reuters) – Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports and exploring producing other biofuels as supply to the European Union, their most significant purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and experts stated.
The EU will enforce provisionary anti-dumping responsibilities of between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 business including leading producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export service that deserved $2.3 billion in 2015.
Some larger manufacturers are eyeing the marine fuel market in China and Singapore, the top marine fuel hub, as they seek to offset already falling biodiesel exports to the EU, biofuel executives stated.
Exports to the bloc have fallen sharply since mid-2023 in the middle of investigations. 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 shrank to just over 50,000 tons, the lowest because mid-2019, according to customs 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, taking 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 enjoyed fat earnings over the last few years, making the many of the EU’s green energy policy that grants aids to companies that are using biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.
Many 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 brief. The EU began in August last year examining 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 thought to be priced synthetically low and damaging regional producers.
Anticipating the tariffs, traders stockpiled on used cooking oil (UCO), raising rates of the feedstock, while rates of biodiesel sank in view of shrinking demand for the Chinese supply.
“With hefty rates of UCO partly supported by strong U.S. and European need, and free-falling item prices, business are having a bumpy ride surviving,” stated Gary Shan, primary marketing officer of Henan Junheng.
Prices of hydrotreated veggie oil, or HVO, a primary kind of biodiesel, have actually cut in half versus last year’s average to the current $1,200 to $1,300 per metric heap and are off a peak of $3,000 in 2022, Shan included.
With low rates, biodiesel plants have cut their operations to a lowest level of under 20% of existing capability on average in July, down from 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 brand-new high this year. UCO exports skyrocketed by two-thirds year-on-year in the first half of 2024 to 1.41 million loads, with the United States, Singapore and the Netherlands the top locations.
OUTLETS
While numerous smaller sized plants are most likely to shutter production forever, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring new outlets consisting of the marine fuel market at 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, agreed in January with COSCO Shipping to utilize more biodiesel in marine fuel.
Companies would likewise accelerate preparation and structure of sustainable air travel fuel (SAF) plants, executives said. China is anticipated to announce an SAF required before the end of 2024.
They have also been scouting for new biodiesel clients 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; Editing by Ana Nicolaci da Costa)
