China’s Biodiesel Producers for Markets; EU Imposes Severe Tariffs

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August 18, 2024

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by Pragya Singh (Middle East Headlines) Biofuel executives and analysts say that producers of Chinese biodiesel are looking for new Asian markets for their exports and are thinking about making more biofuels as their supply to the European Union, their biggest buyer, runs out before anti-dumping tariffs come into effect.

Chinese biodiesel will be subject to provisional anti-dumping duties from Friday that range from 12.8% to 36.4%. Over forty businesses, including leading producers Zhejiang Jiaao, Henan Junheng, and Longyan Zhuoyue Group, will be affected by these duties in an export industry worth $2.3 billion last year. During investigations, exports to the bloc have significantly decreased since mid-2023.

Biofuel executives stated that some larger producers are eyeing the marine fuel market in China and Singapore, the world’s top marine fuel hub. According to data from Chinese customs, volumes decreased by 51% in the first six months of this year to 567,440 tons from the previous year.

Customs data indicate that shipments in June fell to just over 50,000 tons, the lowest level since the middle of 2019 A record 1.8 million tons of Chinese biodiesel exported to the EU in 2023 represented 90% of all exports that year. In 2023, the Netherlands received 84% of China’s biodiesel shipments to the EU, according to data from Chinese customs.

Spain and Belgium finished in second and third place, respectively. Taking advantage of the EU’s green energy policy, which provides subsidies to companies like Repsol, Shell, and Neste that use biodiesel as a sustainable transportation fuel, Chinese biodiesel producers have made a lot of money in recent years. Many of China’s biodiesel producers are small, privately owned facilities that process waste oil from millions of Chinese restaurants. These facilities employ dozens of people.

Prior to the boom in biodiesel exports, they were processing leather products and making lower-value goods like soap. The boom, on the other hand, was brief. The EU began its investigation into Indonesian biodiesel in August of last year, following a 14-month anti-dumping investigation into Chinese biodiesel that was believed to be priced artificially low and undercutting local producers. It was thought that Indonesian biodiesel dodged taxes by going through China and Britain.

In anticipation of the tariffs, traders stocked up on used cooking oil (UCO), driving up feedstock prices and driving down biodiesel prices as demand for the Chinese supply decreased.

“Companies are having a tough time surviving with hefty prices of UCO partly supported by strong U.S. and European demand and free-falling product prices,” stated Gary Shan, chief marketing officer of Henan Junheng. Shan added that the price of hydrotreated vegetable oil, or HVO, a common type of biodiesel, has decreased by half from the average of last year to between $1,200 and $1,300 per metric ton, well below the peak of $3,000 in 2022.

Due to low prices, biodiesel plants have reduced their operations to an all-time low of less than 20% of their current capacity on average in July, according to Chinese consultancies Sublime China Information and JLC.

This is lower than a peak of 50%, which was last seen at the beginning of 2023. Meanwhile, declining biodiesel sales are helping China’s UCO exports, which analysts anticipate will reach a new high this year. UCO exports increased by two-thirds in the first half of 2024, reaching 1.41 million tons.

The United States, Singapore, and the Netherlands were the most popular destinations.

OUTLETS While many smaller plants will probably continue to screen production indefinitely, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Gathering, and Longyan Zhuoyue are investigating new outlets, such as the domestic marine fuel market and the significant center of Singapore, which is using more biodiesel for transport fuel mixing, according to the biofuel chiefs.

In January, one of the producers, Longyan Zhuoyue, and COSCO Shipping agreed to use more biodiesel in marine fuel. Companies would also accelerate the planning and construction of sustainable aviation fuel (SAF) plants, according to executives. China is expected to give the SAF a mandate before the end of 2024. The officials went on to say that they have also been looking for new customers for biodiesel outside of the EU in countries like Australia, Japan, South Korea, and Southeast Asia, where the alternative fuel is required by law. READ MORE

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Excerpt from S&P Global: China's biodiesel imports to EU almost doubled from 2022 to 2024; EU producers struggled to breakeven due to influx of cheap Chinese imports; EU imposes anti-dumping duties up to 36.4% on Chinese biodiesel from Aug 2024 -- The EU has pushed ahead with plans to impose antidumping duties of up to 36.4% on Chinese biodiesel imports, it said Aug. 16, after finding that European producers had struggled to breakeven in 2024 due to an influx of supply. Effective from Aug. 16, provisional measures will impose a 36.4% duty on biodiesel and hydrotreated vegetable oil from Chinese producers, while 40 companies that cooperated with the investigation will benefit from a lower 23.7% duty. Two other Chinese producers -- EcoCeres Group and Zhuoyue Group -- were also granted discounted duties of 12.8% and 25.4%, respectively, the EC said in a statement. READ MORE

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