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

By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel manufacturers are seeking new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their greatest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and experts said.

The EU will enforce provisionary anti-dumping duties of between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 business including leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export company that deserved $2.3 billion in 2015.

Some larger manufacturers are considering the marine fuel market in China and Singapore, the world's leading marine fuel center, as they seek to offset already falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have fallen dramatically considering that mid-2023 amid investigations. Volumes in the very first six months of this year plunged 51% from a year previously to 567,440 tons, Chinese custom-mades information revealed.

June deliveries shrank to simply 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 tons 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 showed.

Chinese manufacturers of biodiesel have enjoyed fat earnings in current years, maximizing the EU's green energy policy that grants subsidies to business that are utilizing biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.

Much of China's biodiesel manufacturers are privately-run little plants using ratings 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 brief. The EU started in August in 2015 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 synthetically low and undercutting regional manufacturers.

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

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

Prices of hydrotreated vegetable oil, or HVO, a primary kind of biodiesel, have cut in half versus in 2015's average to the present $1,200 to $1,300 per metric lot and are off a peak of $3,000 in 2022, Shan included.

With low prices, biodiesel plants have cut their operations to an all-time low of under 20% of existing capability on average 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 increasing China's UCO exports, which experts anticipate are set to touch a brand-new high this year. UCO exports skyrocketed by two-thirds year-on-year in the first half of 2024 to 1.41 million lots, with the United States, Singapore and the Netherlands the top .

OUTLETS

While many smaller plants are most likely to shutter production indefinitely, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new outlets consisting of the marine fuel market at home and in the important center of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.

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

Companies would also speed up planning and structure of sustainable air travel fuel (SAF) plants, executives said. China is expected to announce an SAF mandate before the end 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