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

The EU will enforce provisionary anti-dumping duties of in between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting 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 last year.

Some bigger producers are eyeing the marine fuel market in China and Singapore, the world’s leading marine fuel hub, as they look for to balance out currently falling biodiesel exports to the EU, biofuel executives stated.

Exports to the bloc have fallen sharply considering that mid-2023 amid investigations. Volumes in the very first six months of this year plunged 51% from a year earlier to 567,440 heaps, Chinese customizeds data revealed.

June deliveries shrank to just over 50,000 loads, the lowest 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, soaking 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 actually taken pleasure in fat profits in current years, taking advantage of the EU’s green energy policy that approves subsidies to companies that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

A lot of China’s biodiesel are privately-run little plants employing scores of employees processing waste oil collected from countless Chinese dining establishments. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather items.

However, the boom was temporary. The EU started in August last year investigating Indonesian biodiesel that was thought of circumventing 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 damaging local producers.

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

“With hefty prices of UCO partly supported by strong U.S. and European demand, and free-falling item costs, companies are having a difficult time enduring,” stated Gary Shan, primary marketing officer of Henan Junheng.

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

With low costs, biodiesel plants have cut their operations to an all-time low of under 20% of existing capability typically 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 improving China’s UCO exports, which analysts predict are set to touch a brand-new high this year. UCO exports soared 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 destinations.

OUTLETS

While lots of smaller plants are most 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 center of Singapore, which is using more biodiesel for ship fuel mixing, according to the biofuel executives.

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

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

They have likewise been scouting for new biodiesel clients outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are local mandates for the alternative fuel, the authorities included.

(Reporting by Chen Aizhu