Mission NewEnergy Limited

About Us

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 most significant purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and analysts stated.

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

Some bigger producers are considering the marine fuel market in China and Singapore, the world’s top marine fuel hub, as they look for to offset already falling biodiesel exports to the EU, biofuel executives said.

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

June deliveries diminished to simply over 50,000 loads, the most affordable given 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 shipments to the EU, followed by Belgium and Spain, Chinese custom-mades figures showed.

Chinese manufacturers of biodiesel have delighted in fat earnings in the last few years, making the many of the EU’s green energy policy that grants aids to business that are using biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.

A number of China’s biodiesel manufacturers are privately-run little plants utilizing ratings of workers processing waste oil collected from countless Chinese dining establishments. Before the biodiesel export boom, they were making lower-value products like soaps and processing leather items.

However, the boom was brief. The EU started in August in 2015 examining Indonesian biodiesel that was presumed of 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 local producers.

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

“With hefty costs of UCO partially supported by strong U.S. and European demand, and free-falling item rates, business are having a bumpy ride making it through,” said Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated veggie oil, or HVO, a primary type of biodiesel, have actually cut in half versus last year’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 rates, biodiesel plants have actually cut their operations to an all-time low 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, diminishing biodiesel sales are enhancing China’s UCO exports, which analysts predict are set to touch a new high this year. UCO exports skyrocketed by two-thirds year-on-year in the very first half of 2024 to 1.41 million tons, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

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

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

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

They have also been scouting for brand-new biodiesel clients outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are regional requireds for the alternative fuel, the officials included.

(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)