China’s Biodiesel Producers Seek Brand-new Outlets As Hefty EU Tariffs Bite
By Chen Aizhu
SINGAPORE, Aug 16 (Reuters) – Chinese biodiesel manufacturers are looking for new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their most significant buyer, dries up ahead of anti-dumping tariffs, biofuel executives and analysts stated.
The EU will enforce provisionary anti-dumping tasks of between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 business consisting of leading manufacturers 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 top marine fuel center, as they look for to balance out currently falling biodiesel exports to the EU, stated.
Exports to the bloc have actually fallen sharply because mid-2023 amidst examinations. Volumes in the first six months of this year plunged 51% from a year previously to 567,440 tons, Chinese customs information showed.
June shipments shrank to simply over 50,000 tons, the most affordable because 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, 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 actually enjoyed fat profits recently, making the most of the EU’s green energy policy that gives 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 small plants using scores of workers processing waste oil collected from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value products like soaps and processing leather products.
However, the boom was temporary. 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 synthetically low and undercutting local manufacturers.
Anticipating the tariffs, traders stockpiled on used cooking oil (UCO), raising costs of the feedstock, while prices of biodiesel sank in view of shrinking demand for the Chinese supply.
“With substantial prices of UCO partially supported by strong U.S. and European need, and free-falling item prices, companies are having a hard time surviving,” stated Gary Shan, primary marketing officer of Henan Junheng.
Prices of hydrotreated grease, or HVO, a primary type of biodiesel, have halved versus in 2015’s average to the current $1,200 to $1,300 per metric load and are off a peak of $3,000 in 2022, Shan included.
With low rates, biodiesel plants have actually cut their operations to a lowest level of under 20% of existing capacity usually 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 predict 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 loads, with the United States, Singapore and the Netherlands the leading locations.
OUTLETS
While numerous smaller plants are likely to shutter production indefinitely, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring new outlets consisting of the marine fuel market in your home and in the important center of Singapore, which is utilizing more biodiesel for ship fuel blending, 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 speed up preparation and building of sustainable air travel fuel (SAF) plants, executives stated. China is expected to announce an SAF mandate before completion of 2024.
They have actually likewise been searching 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 added.
(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)