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1 China's Biodiesel Producers Seek new Outlets As Hefty EU Tariffs Bite

By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel producers are seeking 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 company that was worth $2.3 billion last year.

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

Exports to the bloc have fallen dramatically considering that mid-2023 amid investigations. Volumes in the first six months of this year plunged 51% from a year previously to 567,440 tons, Chinese customs information showed.

June deliveries diminished to just over 50,000 lots, the most affordable given that mid-2019, according to custom-mades data.

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 shipments to the EU, followed by Belgium and Spain, Chinese custom-mades figures revealed.

Chinese producers of biodiesel have actually delighted in fat profits in the last few years, taking advantage of the EU's green energy policy that grants aids to companies that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

Much of China's biodiesel producers are privately-run little plants utilizing scores of workers processing waste oil collected from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value products like soaps and items.

However, the boom was temporary. 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 artificially low and damaging local producers.

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

"With substantial costs of UCO partly supported by strong U.S. and European demand, and free-falling item prices, companies are having a bumpy ride surviving," stated Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a main type of biodiesel, have actually halved versus in 2015's average to the present $1,200 to $1,300 per metric ton 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 capacity usually 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 enhancing China's UCO exports, which analysts anticipate 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 heaps, with the United States, Singapore and the Netherlands the leading locations.

OUTLETS

While lots of smaller plants are likely to shutter production forever, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new outlets consisting of the marine fuel market at home and in the important center of Singapore, which is utilizing more biodiesel for ship fuel blending, according to the biofuel executives.

Among the producers, Longyan Zhuoyue, agreed in January with COSCO Shipping to use more biodiesel in marine fuel.

Companies would likewise speed up planning and building of sustainable air travel fuel (SAF) plants, executives said. China is expected to reveal an SAF mandate before the end of 2024.

They have likewise been hunting 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 authorities added.

(Reporting by Chen Aizhu