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Market Brief: China and Used Cooking Oil

To develop Zhoushan Island into a bunker hub, local government has issued 4 bunkering licenses to private companies in June this year. Local government even subsides bunkering fuel prices. The first 10 months of this year, Zhoushan Island has bunkered about 1.5 million tons of marine fuels oils, still very small but a significant increase of 80% over the same period last year. Increased bunkering activities have also generated additional storage space requirement for independent terminal operators on the Island. Bunkering business on the Island was monopolized by stated owned oil companies until this year.

We currently receive a lot of UCO storage enquiries which are a result of the stricter quality controls for the feed industry in China. According to the new policy issued by the State Council of China, UCO is no longer allowed to flow unlimited into the animal feedstock industry where it was mainly used for. These measurements to reduce UCO as raw material for animal feed have led to increasing exports to Europe and in particular the Netherlands and Spain. In Europe the UCO is used for the production of 2nd generation biodiesel. With the new policy published, the supply of UCO will continue to increase in the upcoming years. Moreover, due to the weak domestic market, Chinese UCO collectors and factories are forced to find their opportunities in the overseas energy market which will enhance competition among Chinese exporters. At the same time, this development is also creating opportunities for European biodiesel producers to start opening biodiesel plants in China. In other words, it is certainly an interesting market to keep an eye on.

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