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 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 experts said.
The EU will impose provisional anti-dumping duties of in between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 companies including producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export organization that was worth $2.3 billion last year.
Some larger producers are eyeing the marine fuel market in China and Singapore, the world's leading marine fuel hub, as they look for to balance out already falling biodiesel exports to the EU, biofuel executives said.
Exports to the bloc have actually fallen greatly because mid-2023 amid examinations. Volumes in the first 6 months of this year plunged 51% from a year earlier to 567,440 loads, Chinese customs information showed.
June shipments shrank to just over 50,000 loads, the most affordable because mid-2019, according to customizeds 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, soaking in 84% of China's biodiesel shipments to the EU, followed by Belgium and Spain, Chinese custom-mades figures revealed.
Chinese producers of biodiesel have taken pleasure in fat profits over 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 transport fuel such as Repsol, Shell and Neste.
Many of China's biodiesel producers are privately-run small plants utilizing 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 products.
However, the boom was short-term. The EU started in August last year examining Indonesian biodiesel that was thought of circumventing duties by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced synthetically low and undercutting regional manufacturers.
Anticipating the tariffs, traders stockpiled on utilized cooking oil (UCO), raising rates of the feedstock, while costs of biodiesel sank in view of shrinking demand for the Chinese supply.
"With large prices of UCO partially supported by strong U.S. and European need, and free-falling item rates, business are having a hard time surviving," said Gary Shan, chief marketing officer of Henan Junheng.
Prices of hydrotreated grease, or HVO, a main type of biodiesel, have halved versus in 2015's average to the current $1,200 to $1,300 per metric lot 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, 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 boosting China's UCO exports, which experts forecast 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 destinations.
OUTLETS
While many smaller plants are likely to shutter production forever, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out brand-new outlets consisting of the marine fuel market in your home and in the essential center of Singapore, which is utilizing more biodiesel for ship fuel blending, 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 speed up planning and structure of sustainable aviation fuel (SAF) plants, executives said. China is expected to reveal an SAF required before the end of 2024.
They have actually likewise been hunting for brand-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 added.
(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)