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  • Founded Date 24/05/1932
  • Sectors Accounting / Finance
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China’s Biodiesel Producers Seek Brand-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 greatest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and analysts said.

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

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

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

June shipments shrank to simply over 50,000 loads, the most affordable given that mid-2019, according to customizeds 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 shipments to the EU, followed by and Spain, Chinese customs figures showed.

Chinese manufacturers of biodiesel have enjoyed fat earnings recently, making the many of the EU’s green energy policy that approves aids to companies that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

Many of China’s biodiesel producers are privately-run little plants employing scores of workers 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 began in August last year examining Indonesian biodiesel that was thought of preventing 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 rates of the feedstock, while costs of biodiesel sank in view of diminishing demand for the Chinese supply.

„With hefty costs of UCO partially supported by strong U.S. and European demand, and free-falling item costs, business are having a difficult time making it through,“ said Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a primary type of biodiesel, have actually halved versus last year’s average to the current $1,200 to $1,300 per metric heap and are off a peak of $3,000 in 2022, Shan included.

With low prices, biodiesel plants have actually cut their operations to a lowest level of under 20% of existing capability usually 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 boosting China’s UCO exports, which analysts predict are set to touch a new high this year. UCO exports soared by two-thirds year-on-year in the very first half of 2024 to 1.41 million heaps, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

While many smaller plants are likely to shutter production indefinitely, bigger 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 crucial hub of Singapore, which is utilizing more biodiesel for ship fuel mixing, 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 also speed up planning and structure of sustainable aviation fuel (SAF) plants, executives said. China is expected to announce an SAF required before the end of 2024.

They have likewise 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 added.

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

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