By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel manufacturers are looking for brand-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 provisional tasks of between 12.8% and 36.4% on Chinese biodiesel from Friday, striking over 40 companies including leading producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export business that deserved $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 seek to offset currently falling biodiesel exports to the EU, biofuel executives said.

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

June shipments shrank to just over 50,000 heaps, the lowest given that 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 customs figures revealed.

Chinese producers of biodiesel have delighted in fat revenues recently, taking advantage of the EU’s green energy policy that grants subsidies to companies 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 utilizing ratings of workers processing waste oil collected from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value goods like soaps and processing leather products.

However, the boom was short-term. The EU started in August last year 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 synthetically low and undercutting local manufacturers.

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

“With substantial rates of UCO partly supported by strong U.S. and European demand, and free-falling product prices, companies are having a difficult time surviving,” said Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a main kind of biodiesel, have actually cut in half versus in 2015’s average to the current $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 capacity typically in July, below a peak of 50% last seen in early 2023, according to Chinese consultancies Sublime China Information and JLC.

Meanwhile, shrinking biodiesel sales are boosting China’s UCO exports, which experts anticipate 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 tons, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

While many smaller plants are likely to shutter production forever, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new outlets including the marine fuel market at home and in the essential hub of Singapore, which is utilizing more biodiesel for ship fuel mixing, according to the biofuel executives.

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

Companies would likewise accelerate preparation and building of sustainable air travel fuel (SAF) plants, executives stated. China is anticipated to reveal an SAF mandate before completion of 2024.

They have likewise been scouting 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 included.

(Reporting by Chen Aizhu