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 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 last year.

Some larger manufacturers are considering the marine fuel market in China and Singapore, the world’s leading marine fuel center, as they look for to offset currently falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have fallen greatly since mid-2023 amid examinations. Volumes in the very first 6 months of this year plunged 51% from a year previously to 567,440 loads, Chinese custom-mades information showed.

June shipments shrank to simply over 50,000 loads, the lowest because mid-2019, according to customs data.

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 top importer in 2023, taking in 84% of China’s biodiesel shipments to the EU, followed by Belgium and Spain, Chinese custom-mades figures revealed.

Chinese producers of biodiesel have actually taken pleasure in fat profits recently, taking advantage of the EU’s green energy policy that gives aids to companies that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

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

However, the boom was brief. The EU started in August in 2015 investigating Indonesian biodiesel that was thought of by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced artificially low and damaging regional producers.

Anticipating the tariffs, traders stocked up on utilized cooking oil (UCO), lifting rates of the feedstock, while prices of biodiesel sank in view of diminishing demand for the Chinese supply.

“With significant costs of UCO partially supported by strong U.S. and European demand, and free-falling product rates, business are having a bumpy ride surviving,” said Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a main 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 costs, biodiesel plants have cut their operations to an all-time low 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, shrinking biodiesel sales are enhancing China’s UCO exports, which experts forecast 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 tons, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

While many smaller plants are most likely to shutter production forever, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring new outlets including the marine fuel market at home and in the crucial center 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 use more biodiesel in marine fuel.

Companies would also speed up preparation and structure of sustainable aviation fuel (SAF) plants, executives said. China is expected to announce an SAF mandate before completion of 2024.

They have actually also been hunting for new biodiesel clients outside the EU bloc, in Australia, Japan, South Korea and Southeast Asia where there are regional mandates for the alternative fuel, the officials included.

(Reporting by Chen Aizhu