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Founded Date February 11, 1919
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China’s Biodiesel Producers Seek 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 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 said.
The EU will enforce provisional 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 organization that was worth $2.3 billion in 2015.
Some larger producers are eyeing the marine fuel market in China and Singapore, the world’s leading 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 greatly since mid-2023 amid examinations. Volumes in the first 6 months of this year plunged 51% from a year previously to 567,440 heaps, Chinese customs information showed.
June deliveries diminished to just over 50,000 tons, the least expensive given that mid-2019, according to custom-mades 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 top importer in 2023, taking in 84% of China’s biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customs figures showed.
Chinese producers of biodiesel have actually taken pleasure in fat profits in the last few years, making the many of the EU’s green energy policy that approves aids to business that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.
Much of China’s biodiesel manufacturers are privately-run small plants using scores of employees processing waste oil gathered from millions of Chinese dining establishments. Before the biodiesel export boom, they were making lower-value goods 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 circumventing tasks 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), raising prices of the feedstock, while rates of biodiesel sank in view of shrinking need for the Chinese supply.
“With large rates of UCO partially supported by strong U.S. and European demand, and free-falling item costs, companies are having a tough time making it through,” stated Gary Shan, chief marketing officer of Henan Junheng.
Prices of hydrotreated grease, or HVO, a primary kind of biodiesel, have halved versus in 2015’s average to the present $1,200 to $1,300 per metric ton and are off a peak of $3,000 in 2022, Shan included.
With low rates, biodiesel plants have cut their operations to an all-time low of under 20% of existing capability 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, shrinking biodiesel sales are boosting China’s UCO exports, which analysts anticipate 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 loads, 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 checking out new outlets including 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, concurred in January with COSCO Shipping to utilize more biodiesel in marine fuel.
Companies would likewise accelerate planning and structure of fuel (SAF) plants, executives said. China is expected to reveal an SAF required before the end of 2024.
They have actually also been scouting for brand-new biodiesel customers outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are regional requireds for the alternative fuel, the officials added.
(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)