GitLab

By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel manufacturers are looking for new outlets in Asia for their exports and exploring producing other biofuels as supply to the European Union, their biggest buyer, dries up ahead of anti-dumping tariffs, biofuel executives and experts stated.

The EU will impose provisional anti-dumping responsibilities of in between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 companies consisting of leading producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export organization that was worth $2.3 billion in 2015.

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

Exports to the bloc have fallen greatly because mid-2023 amid investigations. Volumes in the first six months of this year plunged 51% from a year previously to 567,440 lots, Chinese customizeds information showed.

June shipments diminished to simply over 50,000 lots, the most affordable since mid-2019, according to customizeds data.

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 top importer in 2023, soaking in 84% of China's biodiesel deliveries to the EU, followed by Belgium and Spain, Chinese custom-mades figures revealed.

Chinese manufacturers of biodiesel have actually taken pleasure in fat earnings in recent years, maximizing the EU's green energy policy that gives aids to companies that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

A lot of China's biodiesel manufacturers are privately-run little plants employing scores of employees processing waste oil gathered from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather products.

However, the boom was brief. The EU started in August last year investigating Indonesian biodiesel that was presumed of preventing responsibilities by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced synthetically low and damaging local producers.

Anticipating the tariffs, traders equipped up on used cooking oil (UCO), lifting rates of the feedstock, while prices of biodiesel sank in view of diminishing need for the Chinese supply.

"With large rates of UCO partly supported by strong U.S. and European need, and free-falling product rates, companies are having a difficult time enduring," stated Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated vegetable oil, or HVO, a main type of biodiesel, have actually halved versus in 2015'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 costs, 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 boosting China's UCO exports, which experts forecast 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 heaps, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

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

One of the producers, Longyan Zhuoyue, concurred in January with COSCO Shipping to use more biodiesel in .

Companies would likewise speed up preparation and structure of sustainable air travel fuel (SAF) plants, executives said. China is anticipated to announce an SAF mandate before the end of 2024.

They have actually likewise been searching for new biodiesel clients outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are local requireds for the alternative fuel, the officials included.

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