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 analysts stated.

The EU will enforce provisionary anti-dumping duties of 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 deserved $2.3 billion last year.

Some bigger manufacturers are considering 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 sharply given that mid-2023 in the middle of examinations. Volumes in the first 6 months of this year plunged 51% from a year earlier to 567,440 lots, Chinese customizeds information showed.

June shipments shrank to just over 50,000 heaps, the lowest given that mid-2019, according to custom-mades information.

At their peak, exports to the EU a record 1.8 million heaps in 2023, representing 90% of all Chinese biodiesel exports that year. The Netherlands was the leading importer in 2023, taking in 84% of China's biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customs figures showed.

Chinese manufacturers of biodiesel have taken pleasure in fat profits in the last few years, making the most of the EU's green energy policy that approves subsidies to companies that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

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

However, the boom was short-term. The EU began in August last year investigating Indonesian biodiesel that was thought of preventing 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 undercutting local manufacturers.

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

"With substantial costs of UCO partially supported by strong U.S. and European need, and free-falling item rates, companies are having a tough time making it through," said Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated vegetable oil, or HVO, a main type of biodiesel, have cut in half 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 cut their operations to an all-time low of under 20% of existing capability usually 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 forecast are set to touch a new high this year. UCO exports skyrocketed 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 locations.

OUTLETS

While numerous smaller sized plants are likely to shutter production indefinitely, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new outlets including the marine fuel market at home and in the crucial center of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.

Among the producers, Longyan Zhuoyue, concurred in January with COSCO Shipping to utilize more biodiesel in marine fuel.

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

They have actually 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; Editing by Ana Nicolaci da Costa)