China Pivots to Europe for Used Cooking Oil Exports as Tariffs Hit Shipments to US

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April 30, 2025

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by Chen Aizhu and Trixie Sher Li Yap (Reuters) China's used cooking oil (UCO) exports to the United States, its largest buyer, are set to plunge in coming months due to steep tariffs, forcing sellers to divert shipments to Europe and elsewhere, industry players said.

With Trump administration is now charging 125% import tariff on Chinese UCO from this month. Shipments to the U.S., valued at $1.1 billion last year, are tumbling with the last cargoes sailing around late March and early April before trade grinds to a halt, said three China-based UCO traders.

China's UCO exports hit an all-time high last year at nearly 3 million metric tons or worth $2.64 billion, according to Chinese customs.

"For the time being, arbitrage to the U.S. is closed and we think it will remain so for the medium term," said Richard Dickinson, Shanghai-based head of trading Amarus Trading, one of the largest dealers of Chinese UCO.

"Some of the exports will be diverted to Europe and new markets in Asia such as Korea, Thailand, Malaysia and India."

At least four new Sustainable Aviation Fuel facilities, which use UCO as an ingredient and totalling at least 700,000 metric tons per year of production capacity, have started up or will begin operation by this year in Thailand, Malaysia and Japan, according to industry insiders.

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Exports to the U.S. have fallen since last December as Beijing removed tax rebates for UCO exports and also due to the new U.S. clean fuel tax policy that discourages the use of imported UCO, and the latest tariffs only exacerbates the situation, a shipper of the fuel said.

The European Union, which mandated a 2% SAF use this year, is likely to become the top destination for at least half of China's UCO shipments in the coming months, the traders said.

CHINA DEMAND UP

Chinese UCO exports is expected to fall this year as demand from its nascent SAF sector rises, traders and biofuel industry officials.

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New SAF plants such as Zhejiang Jiaao Enprotech (603822.SS), opens new tab launched late 2024 and several other plants starting or slated for start-up in the coming few months - owned by Haixin Energy Technology (300072.SZ), opens new tab, Haike Chemical in Shandong and Blue Whale Bioenergy in Zhejiang - are set to become new UCO users, according to industry sources familiar with these plants.

Chinese SAF producers are using 100,000 to 120,000 tons of UCO a month currently, a volume set to climb as new plants begin operations, according to industry estimates.

China began a pilot scheme last September of SAF use at four domestic airports in Beijing, Chengdu, Zhengzhou and Ningbo. READ MORE

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China’s UCO exports to US plunge amid new tariffs (Biofuels International)
Trump threatens to stop importing cooking oil from China as soybean sales tank: It’s his latest attempt to try and reclaim leverage before he meets with Chinese leader Xi Jinping later this month. (Politico Pro)
‘You're killing us': MD soybean farmers lose business from China amid trade war (NBC Washington)
What Does Cooking Oil Have to Do With the U.S.-China Trade War? (Time Magazine)
Trump targets China cooking oil trade - but sales were already tanking (Reuters)

Excerpt from Politico Pro: President Donald Trump said Tuesday he’s considering blocking imports of cooking oil from China in response to the country cutting off all purchases of U.S. soybeans.

“I believe that China purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers, is an Economically Hostile Act,” Trump wrote on Truth Social on Tuesday. “We are considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution. As an example, we can easily produce Cooking Oil ourselves, we don’t need to purchase it from China.”

The post signals Trump’s latest attempt to try and reclaim leverage over his Chinese counterparts ahead of a Nov. 10 negotiating deadline between the two countries. He and Chinese leader Xi Jinping are expected to meet on the sidelines of the Asia-Pacific Economic Cooperation leaders summit in South Korea later this month.

Trump on Friday also threatened placing a 100 percent tariff on all Chinese goods beginning Nov. 1, following China’s decision to restrict rare earth exports. READ MORE

Excerpt from NBC Washington: China slapped a 34% tariff on soybean imports in an ongoing dispute with the Trump administration over tariffs and rare earth minerals.

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The price of a bushel of soybeans has dropped 30% on the world market, (David) Burrier said. That leaves farmers like him with an uncertain future and soybeans sitting in silos.

President Donald Trump acknowledged China isn't buying from American farmers. China is buying from Argentina, a country the U.S. government is considering extending billions of dollars in economic support to.

Trump has floated the idea of a bailout for soybean farmers, but some, like Burrier, don't want a handout. He calls it welfare.

He wants to sell his crops. READ MORE

Excerpt from Time Magazine: U.S. biggest buyer of Chinese cooking oil, despite falling sales

U.S. imports of edible cooking oil from China are relatively small compared to imports of used cooking oil (UCO), which is actually the byproduct of cooking oil and is used as a raw material for fuels, animal feeds, and chemical products like machine lubricants and certain soaps. Chinese UCO imports surged in recent years after President Joe Biden’s Administration prioritized a green transition through the landmark Inflation Reduction Act of 2022, That included offering tax credits and other incentives for the use of sustainable aviation fuel by the transportation industry.

The U.S. went from being a net exporter of UCO to becoming a net importer in 2022, and China has accounted for a significant amount of those imports. In 2023, China became the top supplier of UCO to the U.S. That coincided with a drop in demand for Chinese UCO after the European Union probed Chinese imports for artificially low prices. Chinese sales to the U.S. of processed edible oils, including UCO, hit a record 1.27 million tons, worth around $1.2 billion based on recent trade estimates, in 2024. That accounted for around 43% of Chinese UCO exports last year, according to the Department of Agriculture.

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But Chinese exports of UCO to the U.S. have already been on the decline this year. After American soy farmers raised concerns that the flood of Chinese UCO was crushing their ability to compete for new demand, the Biden Administration moved in January to exclude fuels made from foreign-sourced supplies from tax credits. Trump’s hefty tariffs which climbed to 145% on Chinese imports earlier this year, before being brought down to 30%, also pushed China to turn to other markets. Beijing for its part terminated export tax rebates for UCO in December. Chinese UCO exports dropped by 60% month over month in December, according to the USDA, and Bloomberg reported that the U.S. bought 387,000 tons of Chinese UCO in the first seven months of this year, down 43% from the same period last year.

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The already falling sales of UCO could make it less valuable as leverage over China. Chinese imports of soybean from the U.S. last year, meanwhile, hit a total of $12.6 billion, making China’s de facto U.S. soybean ban this year a major hit to American farmers. READ MORE

Excerpt from Reuters: The U.S. was China's top market for used cooking oil (UCO), importing a record 1.27 million metric tons worth $1.1 billion in 2024. But after China cut tax rebates late last year and the U.S. imposed tariffs on Chinese goods this year, imports plunged 65% in January-August to 290,690 tons, or $286.7 million.

As such, Trump's comments would have "minimal" impact on the commodity, two UCO traders in China said on condition of anonymity as they were not authorized to speak to media.

"Domestic producers are now mainly taking orders for Europe and are no longer considering the U.S. market," said one of the traders.

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SHORT HISTORY AS EXPORT MARKET FOR CHINESE COOKING OIL

The U.S. does not have a long history of being a top export market for Chinese used cooking oil, a product that can be converted into renewable diesel and which has helped the U.S. become one of China's top ten export destinations only as recently as 2022.

By contrast, the Netherlands, Singapore, Spain and Malaysia have consistently processed hundreds of millions dollars' worth of Chinese UCO over the past decade, Chinese customs data shows.

Year-to-date shipments to this year's top buyer Singapore are up 15% from last year at $537 million, while exports to the Netherlands - whose figures are distorted by the Rotterdam megaport - have jumped 131.5% over the same period.

Chinese used cooking oil exports to the U.S. had surged in 2023, driven by federal and state incentives supporting biofuels and a rush to build new renewable diesel plants. READ MORE