CARVIS.KR

By Chen Aizhu

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

The EU will impose provisionary anti-dumping responsibilities of 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 company that deserved $2.3 billion in 2015.

Some larger producers are considering the marine fuel market in China and Singapore, the world's leading marine fuel center, as they seek to balance out currently falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have actually fallen dramatically because mid-2023 amidst examinations. Volumes in the first six months of this year plunged 51% from a year earlier to 567,440 lots, Chinese custom-mades data showed.

June shipments diminished to just over 50,000 loads, the lowest given that mid-2019, according to customizeds 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 top importer in 2023, taking in 84% of China's biodiesel deliveries to the EU, followed by Belgium and Spain, Chinese customs figures showed.

Chinese producers of biodiesel have actually enjoyed fat profits recently, making the most of the EU's green energy policy that grants aids to companies that are using biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.

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

However, the boom was temporary. The EU started in August in 2015 investigating Indonesian biodiesel that was presumed 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 damaging regional producers.

Anticipating the tariffs, traders equipped up on used cooking oil (UCO), raising prices of the feedstock, while costs of biodiesel sank in view of shrinking demand for the Chinese supply.

"With large rates of UCO partly supported by strong U.S. and European demand, and free-falling product prices, business are having a difficult time enduring," stated Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated vegetable oil, or HVO, a primary type of biodiesel, have halved 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 included.

With low rates, biodiesel plants have actually cut their operations to an all-time low of under 20% of existing capacity 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 boosting China's UCO exports, which analysts predict are set to touch a brand-new high this year. UCO exports skyrocketed 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 top locations.

OUTLETS

While lots of smaller sized plants are most likely to shutter production indefinitely, bigger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new outlets consisting of the marine fuel market in your 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 producers, Longyan Zhuoyue, agreed in January with COSCO Shipping to use more biodiesel in marine fuel.

Companies would also speed up preparation and building of sustainable air travel fuel (SAF) plants, executives said. China is anticipated to announce an SAF mandate before the end of 2024.

They have actually likewise 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)