China's Biodiesel Producers Seek Brand-new Outlets As Hefty EU Tariffs Bite

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By Chen Aizhu By Chen Aizhu By Chen Aizhu By Chen Aizhu

By Chen Aizhu


SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel manufacturers are seeking brand-new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their greatest purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and experts said.


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


Some bigger manufacturers are eyeing the marine fuel market in China and Singapore, the world's top marine fuel hub, as they seek to balance out already falling biodiesel exports to the EU, biofuel executives said.


Exports to the bloc have fallen dramatically considering that mid-2023 amid investigations. Volumes in the very first six months of this year plunged 51% from a year previously to 567,440 heaps, Chinese custom-mades information showed.


June shipments diminished to just over 50,000 tons, the most affordable considering that mid-2019, according to custom-mades data.


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, soaking in 84% of China's biodiesel deliveries to the EU, followed by Belgium and Spain, Chinese customs figures showed.


Chinese manufacturers of biodiesel have actually enjoyed fat earnings over the last few years, taking advantage of the EU's green energy policy that approves aids 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 little plants employing scores of workers processing waste oil collected 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 temporary. The EU began in August in 2015 investigating Indonesian biodiesel that was suspected of preventing duties by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced artificially low and damaging regional manufacturers.


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


"With substantial costs of UCO partially supported by strong U.S. and European need, and free-falling product rates, business are having a tough time surviving," said Gary Shan, primary marketing officer of Henan Junheng.


Prices of hydrotreated grease, or HVO, a primary type of biodiesel, have actually cut in half versus last year's average to the present $1,200 to $1,300 per metric lot and are off a peak of $3,000 in 2022, Shan added.


With low prices, biodiesel plants have cut their operations to a lowest level of under 20% of existing capability typically 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 increasing China's UCO exports, which experts anticipate are set to touch a new high this year. UCO exports soared by two-thirds year-on-year in the first half of 2024 to 1.41 million lots, with the United States, Singapore and the Netherlands the leading destinations.


OUTLETS


While lots of smaller plants are likely to shutter production indefinitely, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring new outlets consisting of the marine fuel market at home and in the crucial 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 use more biodiesel in marine fuel.


Companies would also accelerate planning and building of sustainable air travel fuel (SAF) plants, executives stated. China is expected to announce an SAF required before completion of 2024.


They have actually also been hunting for brand-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 officials added.


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

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