By Chen Aizhu

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

The EU will impose provisional anti-dumping responsibilities of between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting 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 larger 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 stated.

Exports to the bloc have fallen dramatically given that mid-2023 amid investigations. Volumes in the first 6 months of this year plunged 51% from a year previously to 567,440 loads, Chinese customizeds data showed.

June shipments shrank to simply over 50,000 heaps, the most affordable because mid-2019, according to custom-mades 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 top importer in 2023, soaking in 84% of China’s biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customizeds figures revealed.

Chinese producers of biodiesel have enjoyed fat profits in current years, making the most of the EU’s green energy policy that approves subsidies to companies that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

Much of China’s biodiesel producers are privately-run little plants utilizing scores of employees processing waste oil collected from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value goods like soaps and processing leather items.

However, the boom was short-lived. The EU started in August in 2015 examining Indonesian biodiesel that was thought 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 local producers.

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

"With hefty prices of UCO partly supported by strong U.S. and European need, and free-falling item prices, business are having a bumpy ride making it through,” said 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 in 2015’s average to the existing $1,200 to $1,300 per metric load 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 on average 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 experts forecast 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 heaps, with the United States, Singapore and the Netherlands the leading locations.

OUTLETS

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

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

Companies would likewise speed up planning and building of sustainable aviation fuel (SAF) plants, executives said. China is expected to reveal an SAF mandate before the end of 2024.

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

(Reporting by Chen Aizhu