By Chen Aizhu

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

The EU will enforce provisionary anti-dumping duties of in between 12.8% and 36.4% on Chinese biodiesel from Friday, hitting over 40 business including leading producers Zhejiang Jiaao, Henan Junheng and Longyan Zhuoyue Group in an export service that was worth $2.3 billion last year.

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

Exports to the bloc have fallen sharply given that mid-2023 in the middle of investigations. Volumes in the first 6 months of this year plunged 51% from a year earlier to 567,440 tons, Chinese customizeds information revealed.

June deliveries diminished to just over 50,000 lots, the lowest given that mid-2019, according to customizeds data.

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 leading importer in 2023, taking in 84% of China's biodiesel deliveries to the EU, followed by Belgium and Spain, Chinese customs figures revealed.

Chinese producers of biodiesel have taken pleasure in fat profits in the last few years, taking advantage of the EU's green energy policy that approves subsidies to companies that are using biodiesel as a sustainable transport fuel such as Repsol, Shell and Neste.

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

However, the boom was temporary. 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 believed to be priced artificially low and undercutting local manufacturers.

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

"With substantial rates of UCO partly supported by strong U.S. and European demand, and free-falling item costs, companies are having a bumpy ride making it through," said Gary Shan, primary marketing officer of Henan Junheng.

Prices of hydrotreated grease, or HVO, a main type of biodiesel, have actually cut in half versus in 2015's average to the current $1,200 to $1,300 per metric ton and are off a peak of $3,000 in 2022, Shan included.

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

Meanwhile, shrinking biodiesel sales are enhancing China's UCO exports, which analysts 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 tons, with the United States, Singapore and the Netherlands the leading destinations.

OUTLETS

While many smaller sized plants are most likely to shutter production forever, bigger producers like Zhejiang Jiaao, Leoking Enviro Group and Longyan Zhuoyue are exploring brand-new outlets including the marine fuel market at home and in the important hub of Singapore, which is utilizing more biodiesel for ship fuel mixing, according to the biofuel executives.

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

Companies would likewise accelerate planning and structure of sustainable aviation fuel (SAF) plants, executives stated. China is anticipated to announce an SAF mandate before completion of 2024.

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

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