By Chen Aizhu

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

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 including leading manufacturers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export organization that deserved $2.3 billion in 2015.

Some larger producers are eyeing the marine fuel market in China and Singapore, the world's top marine fuel hub, as they seek to offset already falling biodiesel exports to the EU, biofuel executives stated.

Exports to the bloc have actually fallen dramatically considering that mid-2023 amid investigations. Volumes in the very first six months of this year plunged 51% from a year earlier to 567,440 tons, Chinese custom-mades information showed.

June deliveries shrank to simply over 50,000 heaps, the lowest because mid-2019, according to custom-mades data.

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, soaking in 84% of China's biodiesel shipments to the EU, followed by Belgium and Spain, Chinese custom-mades figures revealed.

Chinese producers of biodiesel have delighted in fat earnings recently, maximizing the EU's green energy policy that grants aids to business that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

A number of China's biodiesel producers are privately-run small plants utilizing scores of employees processing waste oil gathered from countless Chinese restaurants. Before the biodiesel export boom, they were making lower-value goods like soaps and processing leather products.

However, the boom was short-term. The EU started in August last year examining Indonesian biodiesel that was thought of preventing duties by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel thought to be priced synthetically low and undercutting regional manufacturers.

Anticipating the tariffs, traders equipped up on used cooking oil (UCO), raising costs of the feedstock, while rates of biodiesel sank in view of diminishing demand for the Chinese supply.

"With hefty rates of UCO partially supported by strong U.S. and European demand, and free-falling product costs, business are having a bumpy ride enduring," said Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated veggie oil, or HVO, a main kind of biodiesel, have actually halved versus last year's average to the current $1,200 to $1,300 per metric ton and are off a peak of $3,000 in 2022, Shan added.

With low rates, 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 increasing China's UCO exports, which experts predict are set to touch a new high this year. UCO exports skyrocketed by two-thirds year-on-year in the very first half of 2024 to 1.41 million loads, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

While many smaller plants are most likely to shutter production indefinitely, bigger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are checking out new outlets including the marine fuel market at home and in the crucial center of Singapore, which is utilizing more biodiesel for ship fuel mixing, according to the biofuel executives.

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

Companies would likewise accelerate preparation and structure of sustainable air travel fuel (SAF) plants, executives stated. China is anticipated to announce an SAF required before completion 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 officials included.

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