By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel producers are seeking 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 analysts stated.

The EU will enforce 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 company that deserved $2.3 billion last year.

Some bigger manufacturers are eyeing the marine fuel market in China and Singapore, the world's leading marine fuel center, as they seek to balance out already falling biodiesel exports to the EU, biofuel executives stated.

Exports to the bloc have actually fallen sharply because mid-2023 amidst investigations. Volumes in the very first six months of this year plunged 51% from a year earlier to 567,440 lots, Chinese customizeds data revealed.

June shipments diminished to just over 50,000 loads, the most affordable because mid-2019, according to customizeds information.

At their peak, exports to the EU reached a record 1.8 million tons in 2023, representing 90% of all Chinese biodiesel exports that year. The Netherlands was the leading importer in 2023, taking in 84% of China's biodiesel shipments to the EU, followed by Belgium and Spain, Chinese customs figures showed.

Chinese manufacturers of biodiesel have taken pleasure in fat revenues over the last few years, maximizing the EU's green energy policy that grants subsidies to business that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

A lot of China's biodiesel manufacturers are privately-run small plants utilizing scores of employees processing waste oil gathered from millions of Chinese dining establishments. Before the biodiesel export boom, they were making lower-value items like soaps and processing leather items.

However, the boom was short-lived. The EU began in August in 2015 investigating Indonesian biodiesel that was presumed of preventing duties 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 local manufacturers.

Anticipating the tariffs, traders equipped up on utilized cooking oil (UCO), raising costs of the feedstock, while costs of biodiesel sank in view of shrinking need for the Chinese supply.

"With hefty costs of UCO partially supported by strong U.S. and European need, and free-falling item costs, companies are having a difficult time surviving," said Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a primary kind of biodiesel, have actually cut in half versus last year's average to the present $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 actually cut their operations to a lowest level of under 20% of existing capability typically in July, down from a peak of 50% last seen in early 2023, according to Chinese consultancies Sublime China Information and JLC.

Meanwhile, diminishing biodiesel sales are improving China's UCO exports, which experts anticipate are set to touch a brand-new high this year. UCO exports skyrocketed by two-thirds year-on-year in the first half of 2024 to 1.41 million heaps, with the United States, Singapore and the Netherlands the top destinations.

OUTLETS

While lots of smaller plants are likely to shutter production indefinitely, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets consisting of the marine fuel market in your home and in the important 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 also accelerate preparation and building of sustainable air travel fuel (SAF) plants, executives stated. China is expected to announce an SAF mandate before completion of 2024.

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

(Reporting by Chen Aizhu; Editing by Ana Nicolaci da Costa)