By Chen Aizhu
SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel manufacturers are looking for brand-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 enforce provisional anti-dumping duties of between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 companies consisting of leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export business that deserved $2.3 billion last year.
Some bigger manufacturers are eyeing the marine fuel market in China and Singapore, the world's leading marine fuel hub, as they look for to balance out currently falling biodiesel exports to the EU, biofuel executives said.
Exports to the bloc have actually fallen greatly since mid-2023 amidst investigations. Volumes in the very first six months of this year plunged 51% from a year previously to 567,440 heaps, Chinese customs information revealed.
June shipments shrank to simply over 50,000 heaps, the most affordable considering that mid-2019, according to customizeds 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 deliveries to the EU, followed by Belgium and Spain, Chinese custom-mades figures showed.
Chinese manufacturers of biodiesel have taken pleasure in fat earnings in current years, maximizing the EU's green energy policy that grants aids to business that are utilizing biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.
A lot of China's biodiesel manufacturers are privately-run small plants employing ratings of workers processing waste oil gathered from countless Chinese dining establishments. Before the biodiesel export boom, they were making lower-value goods like soaps and processing leather items.
However, the boom was brief. The EU started in August last year investigating Indonesian biodiesel that was presumed of circumventing responsibilities 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 local manufacturers.
Anticipating the tariffs, traders stockpiled on used cooking oil (UCO), lifting prices of the feedstock, while rates of biodiesel sank in view of shrinking demand for the Chinese supply.
"With large rates of UCO partially supported by strong U.S. and European demand, and free-falling item prices, companies are having a difficult time enduring," said Gary Shan, chief marketing officer of Henan Junheng.
Prices of hydrotreated grease, or HVO, a main type of biodiesel, have cut in half versus last year's average to the existing $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 actually cut their operations to a lowest level 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 increasing China's UCO exports, which analysts anticipate 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 top destinations.
OUTLETS
While many smaller plants are most likely to shutter production indefinitely, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets including the marine fuel market at home and in the essential center of Singapore, which is utilizing more biodiesel for ship fuel mixing, according to the biofuel executives.
One of the producers, Longyan Zhuoyue, concurred 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 expected to reveal an SAF required before of 2024.
They have also been hunting for new biodiesel customers outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are local requireds for the alternative fuel, the authorities included.
(Reporting by Chen Aizhu
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China's Biodiesel Producers Seek new Outlets As Hefty EU Tariffs Bite
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