By Chen Aizhu
SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel producers are looking for new outlets in Asia for their exports and exploring producing other biofuels as supply to the European Union, their most significant buyer, dries up ahead of anti-dumping tariffs, biofuel executives and experts stated.
The EU will enforce provisional 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 service that deserved $2.3 billion in 2015.
Some larger producers are considering the marine fuel market in China and Singapore, the world's top marine fuel hub, as they seek to balance out currently falling biodiesel exports to the EU, biofuel executives said.
Exports to the bloc have actually fallen sharply considering that mid-2023 in the middle of investigations. Volumes in the very first 6 months of this year plunged 51% from a year earlier to 567,440 tons, Chinese customs data revealed.
June shipments diminished to just over 50,000 heaps, the most affordable because mid-2019, according to information.
At their peak, exports to the EU reached a record 1.8 million loads 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 customs figures showed.
Chinese producers of biodiesel have actually enjoyed fat revenues in the last few years, maximizing 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.
Many of China's biodiesel producers are privately-run small plants utilizing scores of workers processing waste oil collected from millions of Chinese restaurants. Before the biodiesel export boom, they were making lower-value products like soaps and processing leather products.
However, the boom was short-term. The EU began in August in 2015 examining Indonesian biodiesel that was thought of circumventing tasks by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced artificially low and undercutting regional producers.
Anticipating the tariffs, traders stocked up on utilized cooking oil (UCO), raising prices of the feedstock, while prices of biodiesel sank in view of diminishing demand for the Chinese supply.
"With large rates of UCO partially supported by strong U.S. and European demand, and free-falling product rates, business are having a bumpy ride enduring," said Gary Shan, primary marketing officer of Henan Junheng.
Prices of hydrotreated grease, or HVO, a main 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 included.
With low rates, biodiesel plants have actually cut their operations to a lowest level of under 20% of existing capacity usually 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 boosting China's UCO exports, which experts anticipate 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 tons, with the United States, Singapore and the Netherlands the leading destinations.
OUTLETS
While numerous smaller sized plants are likely to shutter production indefinitely, bigger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets consisting of the marine fuel market in the house and in the important hub of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.
Among the producers, Longyan Zhuoyue, agreed in January with COSCO Shipping to utilize more biodiesel in marine fuel.
Companies would also speed up planning and building of sustainable air travel fuel (SAF) plants, executives stated. China is anticipated to reveal an SAF required before the end of 2024.
They have also been hunting for brand-new biodiesel clients outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are regional mandates for the alternative fuel, the officials included.
(Reporting by Chen Aizhu
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China's Biodiesel Producers Seek Brand new Outlets As Hefty EU Tariffs Bite
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