By Chen Aizhu
SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel manufacturers are seeking new outlets in Asia for their exports and exploring producing other biofuels as supply to the European Union, their greatest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and analysts said.
The EU will enforce provisionary anti-dumping duties of in between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 companies including leading producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export business that was worth $2.3 billion in 2015.
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 stated.
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 loads, Chinese customs information showed.
June deliveries diminished to just over 50,000 heaps, the most affordable considering that mid-2019, according to customs information.
At their peak, exports to the EU reached a record 1.8 million lots 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 deliveries to the EU, followed by Belgium and Spain, Chinese customs figures showed.
Chinese producers of biodiesel have taken pleasure in fat revenues in current years, maximizing the EU's green energy policy that gives aids to companies that are utilizing biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.
A lot of China's biodiesel producers are privately-run small plants utilizing scores of workers processing waste oil gathered from millions of Chinese restaurants. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather products.
However, the boom was brief. The EU began in August last year investigating Indonesian biodiesel that was believed of preventing responsibilities 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 local manufacturers.
Anticipating the tariffs, traders stockpiled on used cooking oil (UCO), raising rates of the feedstock, while prices of biodiesel sank in view of shrinking demand for the Chinese supply.
"With large costs of UCO partially supported by strong U.S. and European need, and free-falling item rates, business are having a hard time surviving," said Gary Shan, primary marketing officer of Henan Junheng.
Prices of hydrotreated vegetable oil, or HVO, a primary type of biodiesel, have actually halved 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 costs, biodiesel plants have actually cut their operations to a lowest level of under 20% of existing capacity 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 improving China's UCO exports, which analysts forecast 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 heaps, with the United States, Singapore and the Netherlands the leading locations.
OUTLETS
While smaller plants are most likely to shutter production forever, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring new outlets including the marine fuel market in your home and in the important center of Singapore, which is utilizing more biodiesel for ship fuel mixing, according to the biofuel executives.
One of the manufacturers, Longyan Zhuoyue, agreed in January with COSCO Shipping to use more biodiesel in marine fuel.
Companies would also accelerate preparation and building of sustainable aviation fuel (SAF) plants, executives said. China is anticipated to reveal an SAF required before the end of 2024.
They have actually likewise been searching for brand-new biodiesel clients 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 Brand new Outlets As Hefty EU Tariffs Bite
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