Mission Biofuels Sdn. Bhd

China’s Biodiesel Producers Seek Brand-new Outlets As Hefty EU Tariffs Bite

By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) – Chinese biodiesel producers are looking for new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their most significant purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and experts said.

The EU will impose provisionary anti-dumping responsibilities of in between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 business including leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export company that deserved $2.3 billion last year.

Some larger producers are eyeing the marine fuel market in China and Singapore, the world’s top marine fuel center, as they look for to balance out currently falling biodiesel exports to the EU, biofuel executives said.

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

June deliveries diminished to just over 50,000 loads, the most affordable considering that mid-2019, according to customs 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 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 delighted in fat earnings in the last few years, maximizing the EU’s green energy policy that gives aids to business that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

Much of China’s biodiesel producers are privately-run small plants employing ratings of employees processing waste oil collected from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value goods like soaps and processing leather items.

However, the boom was short-term. The EU started in August in 2015 examining Indonesian biodiesel that was believed of circumventing tasks by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced synthetically low and damaging regional manufacturers.

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

“With significant costs of UCO partially supported by strong U.S. and European demand, and free-falling item prices, business are having a difficult time enduring,” said Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated vegetable oil, or HVO, a primary type 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 included.

With low costs, biodiesel plants have actually cut their operations to an all-time low of under 20% of existing capability typically 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 boosting China’s UCO exports, which experts predict are set to touch a new high this year. UCO exports soared by two-thirds year-on-year in the very first half of 2024 to 1.41 million lots, with the United States, Singapore and the Netherlands the leading locations.

OUTLETS

While many smaller plants are likely to shutter production indefinitely, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets including the marine fuel market in your home and in the center of Singapore, which is using more biodiesel for ship fuel blending, according to the biofuel executives.

One of the producers, Longyan Zhuoyue, agreed in January with COSCO Shipping to utilize more biodiesel in marine fuel.

Companies would also accelerate planning and building of sustainable air travel fuel (SAF) plants, executives stated. China is anticipated to announce an SAF required before completion of 2024.

They have actually also been searching for 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 authorities included.

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