China's Biodiesel Producers Seek new Outlets As Hefty EU Tariffs Bite
By Chen Aizhu
SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel manufacturers are seeking 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 experts said.
The EU will enforce provisional anti-dumping responsibilities of in 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 business that deserved $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 look for to balance out already falling biodiesel exports to the EU, biofuel executives stated.
Exports to the bloc have fallen greatly because 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 tons, Chinese customs data revealed.
June deliveries diminished to just over 50,000 loads, the most affordable considering that 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 top importer in 2023, taking in 84% of China's biodiesel shipments to the EU, followed by Belgium and Spain, Chinese custom-mades figures showed.
Chinese manufacturers of biodiesel have actually enjoyed fat revenues over the last few years, taking advantage of the EU's green energy policy that gives aids to business that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.
Many of China's biodiesel manufacturers are privately-run little plants using ratings of workers processing waste oil gathered from millions of Chinese restaurants. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather products.
However, the boom was short-lived. The EU started in August in 2015 investigating Indonesian biodiesel that was presumed of preventing duties by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced synthetically low and undercutting local producers.
Anticipating the tariffs, traders stocked up on utilized cooking oil (UCO), lifting prices of the feedstock, while costs of biodiesel sank in view of diminishing demand for the Chinese supply.
"With hefty rates of UCO partly supported by strong U.S. and European demand, and free-falling product rates, business are having a difficult time surviving," said Gary Shan, chief marketing officer of Henan Junheng.
Prices of hydrotreated grease, or HVO, a main kind of biodiesel, have 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 added.
With low rates, biodiesel plants have 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 boosting China's UCO exports, which experts forecast are set to touch a 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 lots of smaller plants are most likely to shutter production indefinitely, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out brand-new outlets including the marine fuel market at home and in the essential center of Singapore, which is using more biodiesel for ship fuel blending, according to the biofuel executives.
Among the manufacturers, Longyan Zhuoyue, concurred in January with COSCO Shipping to use more biodiesel in marine fuel.
Companies would also speed up preparation and structure of sustainable aviation fuel (SAF) plants, said. China is anticipated to announce an SAF required 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 mandates for the alternative fuel, the officials added.
(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)