Heavy tariffs are poised to drastically reduce China’s used cooking oil exports to the United States, its main buyer, forcing suppliers to seek alternative markets like Europe, according to a Reuters report.
Impact of US tariffs
The Trump administration has implemented a 125% import tariff on used cooking oil (UCO) from China, effective this month.
Consequently, UCO shipments to the US, which were valued at $1.1 billion last year, are sharply declining.
According to three China-based UCO traders, the final shipments departed around late March and early April, after which trade is expected to cease.
Chinese customs data revealed that the country’s used cooking oil (UCO) exports reached a record high last year, totaling almost 3 million metric tons and valued at $2.64 billion.
“For the time being, arbitrage to the U.S. is closed and we think it will remain so for the medium term,” Richard Dickinson, Shanghai-based head of trading Amarus Trading, one of the largest dealers of Chinese UCO, was quoted in the report.
Some of the exports will be diverted to Europe and new markets in Asia such as Korea, Thailand, Malaysia and India.
Industry sources indicated to Reuters that Thailand, Malaysia, and Japan are seeing the launch or imminent operation of at least four new Sustainable Aviation Fuel plants utilising UCO.
New demand centers in Asia
These SAF facilities are expected to have a combined annual production capacity of at least 700,000 metric tons by the end of this year.
Exports of UCO to the US have decreased since last December.
This decline is attributed to several factors: Beijing’s elimination of tax rebates for UCO exports, the new US clean fuel tax policy which disincentivises imported UCO, and the latest tariffs, which are worsening the situation, according to a fuel shipper.
The European Union, having mandated a 2% sustainable aviation fuel (SAF) utilisation this year, is anticipated by traders to become the primary destination for at least 50% of China’s UCO exports in the near future.
China demand
Chinese UCO exports are projected to decrease this year due to increasing demand from its developing SAF sector, according to traders and biofuel industry sources.
Dickinson, along with another senior biofuel trader in Beijing, projected a decrease in China’s monthly UCO exports to 150,000-200,000 tons starting in April.
This would represent a 20-40% reduction compared to the average monthly export volume in 2024.
According to the report, the new SAF plants are poised to become new consumers of UCO.
These include Zhejiang Jiaao Enprotech, which commenced operations in late 2024, and several other facilities expected to start up in the near future.
Among these upcoming plants are those owned by Haixin Energy Technology, Haike Chemical in Shandong, and Blue Whale Bioenergy in Zhejiang.
Current industry estimates suggest that Chinese SAF producers are utilising 100,000 to 120,000 tons of UCO monthly.
This consumption volume is expected to increase as new production facilities become operational.
In September of last year, China initiated a trial program for SAF at four domestic airports: Beijing, Chengdu, Zhengzhou, and Ningbo.
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