China's Biodiesel Producers Seek Brand-new Outlets As Hefty EU Tariffs Bite
By Chen Aizhu
SINGAPORE, Aug 16 (Reuters) biodiesel manufacturers are looking for new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their biggest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and analysts said.
The EU will impose provisionary anti-dumping duties of between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 companies including leading producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export business that deserved $2.3 billion in 2015.
Some bigger producers are eyeing the marine fuel market in China and Singapore, the world's leading marine fuel hub, as they look for to offset currently falling biodiesel exports to the EU, biofuel executives stated.
Exports to the bloc have actually fallen sharply because mid-2023 amidst examinations. Volumes in the very first 6 months of this year plunged 51% from a year earlier to 567,440 loads, Chinese customs information revealed.
June deliveries diminished to simply over 50,000 loads, the most affordable given that 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 top importer in 2023, taking in 84% of China's biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customizeds figures revealed.
Chinese producers of biodiesel have actually taken pleasure in fat profits in the last few years, maximizing the EU's green energy policy that gives subsidies to companies that are using biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.
A number of China's biodiesel manufacturers are privately-run small plants using ratings of employees processing waste oil gathered from millions of Chinese restaurants. Before the biodiesel export boom, they were making lower-value products like soaps and processing leather items.
However, the boom was brief. The EU began in August last year examining 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 thought to be priced synthetically low and undercutting local manufacturers.
Anticipating the tariffs, traders stockpiled on used cooking oil (UCO), lifting prices of the feedstock, while prices of biodiesel sank in view of shrinking demand for the Chinese supply.
"With significant rates of UCO partly supported by strong U.S. and European need, and free-falling item rates, business are having a difficult time surviving," stated Gary Shan, chief 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 load 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 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, diminishing biodiesel sales are improving China's UCO exports, which experts forecast are set to touch a brand-new high this year. UCO exports soared by two-thirds year-on-year in the very first half of 2024 to 1.41 million heaps, with the United States, Singapore and the Netherlands the leading destinations.
OUTLETS
While many smaller 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 at home and in the essential hub of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.
One of the manufacturers, Longyan Zhuoyue, agreed in January with COSCO Shipping to utilize more biodiesel in marine fuel.
Companies would likewise speed up planning and building of sustainable aviation fuel (SAF) plants, executives stated. China is anticipated to reveal an SAF required before completion of 2024.
They have likewise been scouting for brand-new biodiesel clients outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are local mandates for the alternative fuel, the authorities added.
(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)