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 biggest buyer, dries up ahead of anti-dumping tariffs, biofuel executives and experts stated.

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

Some larger producers are considering 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 said.

Exports to the bloc have actually fallen dramatically because 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 customs data revealed.

June shipments shrank to just over 50,000 tons, the most affordable since mid-2019, according to customizeds information.

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

Chinese manufacturers of biodiesel have taken pleasure in fat profits in the last few years, making the many of the EU's green energy policy that grants aids to companies that are utilizing biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

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

However, the boom was brief. The EU began in August last year investigating Indonesian biodiesel that was suspected of circumventing duties by going through China and Britain, followed by a 14-month anti-dumping probe into Chinese biodiesel believed to be priced synthetically low and undercutting regional manufacturers.

Anticipating the tariffs, traders stockpiled on utilized cooking oil (UCO), lifting costs of the feedstock, while prices of biodiesel sank in view of diminishing demand for the Chinese supply.

"With significant costs of UCO partly supported by strong U.S. and European demand, and free-falling product rates, business are having a hard time surviving," said Gary Shan, chief marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a primary kind of biodiesel, have halved versus last year's average to the existing $1,200 to $1,300 per metric lot and are off a peak of $3,000 in 2022, Shan added.

With low rates, biodiesel plants have 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 experts anticipate are set to touch a brand-new high this year. UCO exports skyrocketed by two-thirds year-on-year in the very first half of 2024 to 1.41 million lots, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

While lots of smaller sized plants are likely to shutter production forever, larger manufacturers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets including the marine fuel market in your home and in the crucial center of Singapore, which is using more biodiesel for ship fuel blending, according to the biofuel executives.

One of the manufacturers, Longyan Zhuoyue, concurred in January with COSCO Shipping to utilize more biodiesel in marine fuel.

Companies would likewise speed up planning and building of sustainable aviation fuel (SAF) plants, executives stated. China is anticipated to reveal an SAF mandate before completion of 2024.

They have 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)