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 exploring producing other biofuels as supply to the European Union, their greatest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and experts stated.
The EU will enforce provisional anti-dumping tasks of in between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 business including leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export organization 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 hub, as they look for to balance out currently falling biodiesel exports to the EU, biofuel executives said.
Exports to the bloc have actually fallen greatly given that mid-2023 amid investigations. Volumes in the very first 6 months of this year plunged 51% from a year previously to 567,440 heaps, Chinese custom-mades information showed.
June deliveries diminished to just over 50,000 lots, the lowest since mid-2019, according to customs information.
At their peak, exports to the EU reached a record 1.8 million tons 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 customizeds figures showed.
Chinese manufacturers of biodiesel have delighted in fat earnings in the last few years, maximizing the EU’s green energy policy that grants subsidies to companies that are using biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.
A number of China’s biodiesel producers are privately-run small plants employing scores of workers processing waste oil collected from millions of Chinese dining establishments. Before the biodiesel export boom, they were making lower-value products like soaps and processing leather items.
However, the boom was temporary. The EU started in August last year investigating Indonesian biodiesel that was thought of preventing tasks by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced and undercutting regional manufacturers.
Anticipating the tariffs, traders stocked up on used cooking oil (UCO), lifting costs of the feedstock, while prices of biodiesel sank in view of shrinking demand for the Chinese supply.
« With large costs of UCO partly supported by strong U.S. and European need, and free-falling item costs, business are having a difficult time surviving, » said Gary Shan, primary marketing officer of Henan Junheng.
Prices of hydrotreated grease, or HVO, a primary type of biodiesel, have halved versus last year’s average to the current $1,200 to $1,300 per metric ton and are off a peak of $3,000 in 2022, Shan included.
With low prices, biodiesel plants have cut their operations to an all-time low 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, shrinking biodiesel sales are increasing 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 very first half of 2024 to 1.41 million lots, with the United States, Singapore and the Netherlands the top destinations.
OUTLETS
While many smaller plants are likely to shutter production indefinitely, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out 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 blending, 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 speed up preparation and building of sustainable air travel fuel (SAF) plants, executives stated. China is expected to reveal an SAF mandate before the end of 2024.
They have actually likewise been scouting for brand-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 authorities included.
(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)
