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 most significant purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and analysts said.
The EU will impose provisional anti-dumping tasks 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 leading marine fuel center, as they seek to balance out already falling biodiesel exports to the EU, biofuel executives stated.
Exports to the bloc have actually fallen dramatically because mid-2023 amid investigations. Volumes in the first 6 months of this year plunged 51% from a year previously to 567,440 heaps, Chinese customs data revealed.
June deliveries diminished to just over 50,000 heaps, the least expensive because mid-2019, according to customizeds information.
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 leading importer in 2023, soaking in 84% of China's biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customs figures showed.
Chinese producers of biodiesel have actually taken pleasure in fat profits in recent years, making the most of the EU's green energy policy that approves subsidies to companies that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.
A lot of China's biodiesel producers are privately-run little plants utilizing scores 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 short-term. The EU started in August in 2015 examining Indonesian biodiesel that was thought of preventing duties by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced and undercutting local manufacturers.
Anticipating the tariffs, traders stocked up on utilized cooking oil (UCO), lifting prices of the feedstock, while prices of biodiesel sank in view of shrinking need for the Chinese supply.
"With significant costs of UCO partly supported by strong U.S. and European demand, and free-falling product rates, business are having a difficult time enduring," said Gary Shan, chief marketing officer of Henan Junheng.
Prices of hydrotreated grease, or HVO, a primary type of biodiesel, have cut in half versus last year's average to the current $1,200 to $1,300 per metric lot and are off a peak of $3,000 in 2022, Shan added.
With low costs, biodiesel plants have cut their operations to an all-time low of under 20% of existing capacity on average 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 increasing China's UCO exports, which experts predict are set to touch a brand-new high this year. UCO exports soared by two-thirds year-on-year in the first half of 2024 to 1.41 million tons, with the United States, Singapore and the Netherlands the top locations.
OUTLETS
While many smaller sized plants are most likely to shutter production forever, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out brand-new outlets consisting of the marine fuel market in your home and in the crucial center of Singapore, which is utilizing 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 also accelerate preparation and building of sustainable air travel fuel (SAF) plants, executives said. China is expected to reveal an SAF mandate before completion of 2024.
They have also been scouting 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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