mission-newenergy-limited

1 China's Biodiesel Producers Seek new Outlets As Hefty EU Tariffs Bite

By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel producers are looking for brand-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 provisional anti-dumping tasks of between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 business consisting of leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export organization that was worth $2.3 billion in 2015.

Some bigger producers are considering the marine fuel market in China and Singapore, the top marine fuel hub, as they seek to offset already falling biodiesel exports to the EU, biofuel executives stated.

Exports to the bloc have fallen greatly since mid-2023 amidst investigations. Volumes in the very first 6 months of this year plunged 51% from a year previously to 567,440 heaps, Chinese customs information revealed.

June deliveries shrank to just over 50,000 loads, the most affordable considering that mid-2019, according to customs 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 custom-mades figures revealed.

Chinese manufacturers of biodiesel have actually enjoyed fat revenues over the last few years, taking advantage of the EU's green energy policy that gives subsidies to companies that are utilizing biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.

Many of China's biodiesel manufacturers are privately-run little plants using scores of employees processing waste oil collected from millions of Chinese dining establishments. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather items.

However, the boom was short-lived. The EU began in August last year examining Indonesian biodiesel that was believed of preventing duties by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced synthetically low and damaging regional manufacturers.

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

"With significant prices of UCO partially supported by strong U.S. and European need, and free-falling product costs, companies are having a tough time surviving," said Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a main kind of biodiesel, have halved versus in 2015'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 cut their operations to a lowest level 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, diminishing biodiesel sales are enhancing 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 very first half of 2024 to 1.41 million loads, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

While lots of smaller plants are most likely to shutter production forever, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring new outlets consisting of the marine fuel market in the house and in the crucial hub of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.

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

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

They have likewise been hunting 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 officials included.

(Reporting by Chen Aizhu