GitLab

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 buyer, dries up ahead of anti-dumping tariffs, biofuel executives and experts said.

The EU will enforce provisionary 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 service that was worth $2.3 billion in 2015.

Some larger producers are considering the marine fuel market in China and Singapore, the world's leading marine fuel center, as they look for to balance out already falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have actually fallen dramatically because mid-2023 in the middle of investigations. Volumes in the very first six months of this year plunged 51% from a year previously to 567,440 tons, Chinese custom-mades information showed.

June deliveries diminished to just over 50,000 tons, the most affordable given that mid-2019, according to custom-mades 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 producers of biodiesel have actually enjoyed fat earnings recently, taking advantage of the EU's green energy policy that gives subsidies to companies that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

Much of China's biodiesel manufacturers are privately-run small plants employing ratings of workers processing waste oil collected from countless Chinese dining establishments. Before the biodiesel export boom, they were making lower-value goods like soaps and processing leather products.

However, the boom was temporary. The EU started in August in 2015 investigating Indonesian biodiesel that was believed of preventing 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 local manufacturers.

Anticipating the tariffs, traders stockpiled on used cooking oil (UCO), lifting costs of the feedstock, while prices of biodiesel sank in view of shrinking need for the Chinese supply.

"With large rates of UCO partly supported by strong U.S. and European need, and free-falling item rates, companies are having a difficult time making it through," said Gary Shan, chief marketing officer of .

Prices of hydrotreated grease, or HVO, a main kind of biodiesel, have halved versus in 2015's average to the present $1,200 to $1,300 per metric heap and are off a peak of $3,000 in 2022, Shan added.

With low prices, biodiesel plants have cut their operations to a lowest level of under 20% of existing capacity 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 improving China's UCO exports, which experts anticipate are set to touch a new high this year. UCO exports soared 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 leading destinations.

OUTLETS

While many smaller sized plants are likely to shutter production forever, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring new outlets including the marine fuel market in the house and in the essential 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 likewise speed up preparation and building of sustainable air travel fuel (SAF) plants, executives said. China is expected to reveal an SAF mandate before completion of 2024.

They have 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 added.

(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)