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Argent Energy Closes Biodiesel Plant as Chinese Market Pressure Looms

Argent Energy Closes Biodiesel Plant as Chinese Market Pressure Looms

The global green diesel market has seen its share of volatility in recent months. Perhaps the most uncertainty has occurred in Europe as Chinese exports have continued to affect the market.

China’s influence on pricing has already led to consequences for some European operations. With potential anti-dumping restrictions affecting China, what will this mean for biodiesel in Europe and across the international landscape?

Argent Energy Plant Closes in Scotland

Argent Energy, a significant European biodiesel producer, has initiated discussions on a proposal to cease operations at its biodiesel plant in Motherwell, Scotland.

The move comes after a thorough evaluation of several external variables impacting the UK and EU biodiesel industry. The market turns necessitated a shift in the company’s strategic focus.

All viable alternatives were considered before this decision was made. In a statement on the closure, the company noted that it plans to centralize its operations in other, more favorable locations.

The Motherwell plant started its operations in 2005, producing an annual yield of 45,000 tons of waste-based biodiesel. The facility expanded in 2016, owing to the diligent efforts of its workforce.

Argent Energy also operates a second plant at Ellesmere Port, located on the Manchester Ship Canal. Its third facility is strategically located in the Port of Amsterdam, with an expansion plan of the Dutch plant in progress to triple its capacity. However, the current market and closure may impact this capacity expansion plan.

Biofuel Fraud, Dumping, and China’s Market Share in the EU

Argent’s decision to close their Scottish plant also comes amidst other factors that have drastically weakened the European and UK biodiesel industry. Intense competition from subsidized Chinese biodiesel imports as primarily impacted the market.

This fierce competition, coupled with state economic support and subsidies in China, poses serious challenges to the industry. However, these circumstances may be changing due to increased scrutiny of Chinese imports.

The EU is formally investigating claims that China has damaged the market through dumping practices artificially lowering biodiesel prices. This comes after China has already faced allegations of fraudulent biodiesel made with cheaper, lower quality oils.

The outcome of the investigation could lead to major consequences for Chinese biodiesel exporters. Most notably, anti-dumping duties placed on their exports could be imposed.

China Moving Biodiesel Before Anti-Dumping Duties Imposed

China is wasting no time in responding to the investigation by moving quickly with their biodiesel volumes. Taking advantage of the time before potential provisional anti-dumping duties are implemented by the European Commission, Chinese biodiesel exporters are pushing out large volumes to Europe. Interestingly, this surge in exports occurred even amid weak European demand.

This suggests that both Chinese sellers and European buyers are aware that their current trade trajectory might be on borrowed time. As such, there's been a scramble to dispatch as much product across the EU duty limit, all to prevent the payoff of significantly escalated tariffs.

Sources within China told ResourceWise that many in the Chinese market are operating under the belief that the anti-dumping duties are likely to be enacted in May. In practical terms, this perspective implies that Chinese exporters should aim to send out their last biodiesel shipments before the end of March.

Given these conditions and market assumptions, it would be surprising if sizeable Chinese biodiesel quantities appear in the export statistics for March and April.

Demand Drives Chinese Exports Back Up to High Levels

The year kicked off with January's exports to Europe being the smallest monthly volumes dispatched from China since November 2021. Per ResourceWise data, the volume reflected a drop of approximately 68% from December last year.

However, February brought about a radical shift in performance, dispelling any notions that this trade was nearing an end.

China bounced back with stupendous export volumes that surpassed December's peak, disregarding the weak European prices. It was the highest export level recorded from China since the preceding August and was nearly twice the January volume.

The Netherlands still maintained its position as the key recipient of Chinese biodiesel in January. Export numbers were boosted further by significant shipments delivered to Belgium within the same period.

Dutch buyers accelerated their bookings in February, accounting for almost 80% of China's total biodiesel exports for that month. China also finalized the first UK booking since August 2022, making the UK the second-largest destination for Chinese biodiesel in February.

There were also substantial quantities of biodiesel dispatched to Singapore and Malaysia in the previous month, a reflection of the growing bio-bunkering market for marine applications.

Read More: Bio-Bunkering and Maritime Biofuels Show Industry Shift to Renewables

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