By Chen Aizhu

SINGAPORE, Aug 16 (Reuters) - Chinese biodiesel producers are looking for brand-new outlets in Asia for their exports and checking out producing other biofuels as supply to the European Union, their most significant purchaser, dries up ahead of anti-dumping tariffs, biofuel executives and experts said.

The EU will enforce provisional anti-dumping duties of in between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 companies consisting of leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export service that was worth $2.3 billion in 2015.

Some bigger producers are eyeing the marine fuel market in China and Singapore, the world's top center, as they look for to offset already falling biodiesel exports to the EU, biofuel executives said.

Exports to the bloc have fallen greatly because mid-2023 amid examinations. Volumes in the first six months of this year plunged 51% from a year earlier to 567,440 loads, Chinese customs data showed.

June deliveries shrank to just over 50,000 tons, the least expensive given that mid-2019, according to customizeds 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 deliveries to the EU, followed by Belgium and Spain, Chinese customs figures revealed.

Chinese manufacturers of biodiesel have actually taken pleasure in fat revenues over the last few years, taking advantage of the EU's green energy policy that approves subsidies to companies that are utilizing biodiesel as a sustainable transportation fuel such as Repsol, Shell and Neste.

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

However, the boom was temporary. The EU began in August in 2015 investigating Indonesian biodiesel that was suspected of circumventing responsibilities by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced artificially low and undercutting local manufacturers.

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

"With large prices of UCO partially supported by strong U.S. and European demand, and free-falling item prices, companies are having a tough time surviving," stated Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated veggie oil, or HVO, a primary type of biodiesel, have actually halved versus in 2015's average to the present $1,200 to $1,300 per metric heap and are off a peak of $3,000 in 2022, Shan included.

With low costs, biodiesel plants have actually cut their operations to an all-time low of under 20% of existing capacity typically in July, down from a peak of 50% last seen in early 2023, according to Chinese consultancies Sublime China Information and JLC.

Meanwhile, shrinking biodiesel sales are increasing China's UCO exports, which analysts forecast are set to touch a brand-new high this year. UCO exports soared 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 locations.

OUTLETS

While numerous smaller plants are most likely to shutter production indefinitely, larger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new outlets consisting of the marine fuel market in the house and in the essential hub of Singapore, which is utilizing more biodiesel for ship fuel blending, according to the biofuel executives.

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

Companies would also speed up planning and building of sustainable air travel fuel (SAF) plants, executives stated. China is expected to announce an SAF mandate before the end of 2024.

They have likewise been hunting for brand-new biodiesel customers 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