By Chen Aizhu
SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel producers are seeking new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their greatest buyer, dries up ahead of anti-dumping tariffs, biofuel executives and experts said.
The EU will enforce 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 business that deserved $2.3 billion in 2015.
Some larger producers are considering the marine fuel market in China and Singapore, the world's top marine fuel center, as they look for to offset currently falling biodiesel exports to the EU, biofuel executives stated.
Exports to the bloc have actually fallen dramatically given that mid-2023 amidst examinations. 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 shipments diminished to just over 50,000 tons, the lowest given that mid-2019, according to custom-mades 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 top importer in 2023, soaking in 84% of China's biodiesel deliveries to the EU, followed by Belgium and Spain, Chinese customs figures showed.
Chinese producers of biodiesel have delighted in fat revenues in recent years, taking advantage of the EU's green energy policy that gives subsidies to business that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.
A lot of China's biodiesel manufacturers are privately-run small plants employing scores of employees processing waste oil collected from countless 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 investigating Indonesian biodiesel that was suspected of preventing tasks by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced synthetically low and undercutting local producers.
Anticipating the tariffs, traders stockpiled on utilized cooking oil (UCO), lifting rates of the feedstock, while costs of biodiesel sank in view of diminishing need for the Chinese supply.
"With substantial rates of UCO partly supported by strong U.S. and European demand, and free-falling item rates, companies are having a bumpy ride surviving," said Gary Shan, primary marketing officer of Henan Junheng.
Prices of hydrotreated grease, or HVO, a primary type of biodiesel, have actually halved versus in 2015's average to the existing $1,200 to $1,300 per metric load 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 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 enhancing China's UCO exports, which analysts forecast are set to touch a brand-new high this year. UCO exports skyrocketed by two-thirds year-on-year in the very first half of 2024 to 1.41 million lots, with the United States, Singapore and the Netherlands the top destinations.
OUTLETS
While many smaller sized plants are 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 at home and in the crucial center of Singapore, which is utilizing more biodiesel for ship fuel mixing, according to the biofuel executives.
Among the manufacturers, Longyan Zhuoyue, concurred in January with COSCO Shipping to use more biodiesel in marine fuel.
Companies would likewise speed up preparation and structure of sustainable aviation fuel (SAF) plants, executives stated. China is anticipated to announce an SAF required 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 regional mandates for the alternative fuel, the authorities included.
(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)
