The current situation of global biodiesel industry and its prospect in 2020

EU is the largest production and marketing area


Global production slows down and the EU remains the main production and marketing region


Biofuels can be divided into two categories: the first category refers to biofuels based on food crops or vegetable oil, including biodiesel produced by vegetable oil and bioethanol produced by corn and sugarcane; the second category is mainly non food crops, namely biodiesel produced by animal oil and waste edible oil and cellulosic ethanol produced by straw, hay, sawdust and other wastes.


Biodiesel is made from vegetable oil, animal oil, waste oil or microbial oil by transesterification with methanol or ethanol. B30 and B20 mentioned above refer to that in the mixed oil of petrochemical diesel and biodiesel, the proportion of biodiesel in the blend reaches 30% and 20%.


The growth rate of global biodiesel production has slowed down since 2009, especially since 2014. In 2017, the output is estimated to be 27 million tons, and the consumption and output changes are basically the same.


In terms of the global production distribution of biodiesel, the EU is close to 10 million tons, accounting for 36%; central and South America, North America, Asia and Oceania are basically the same, with a production of 5-6 million tons, accounting for about 20%.


From the distribution of global biodiesel consumption, EU accounts for half of the world, reaching 12 million tons, accounting for 48%; central and South America, North America, Asia and Oceania are basically the same, 4-4.5 million tons, accounting for about 18%.


Indonesia: under internal and external troubles, the growth of domestic demand is accelerating


As the main production area of palm oil, Indonesia and Malaysia use palm oil as the main raw material for biodiesel production, almost no imports, mainly exports. It is estimated that in 2019, Indonesia’s biodiesel output will be 6.5 million tons, exports 1.1 million tons, and domestic demand will be 5.4 million tons; Malaysia’s volume is relatively small, estimated output is 1.5 million tons, exports 650000 tons, and domestic demand is 850000 tons.


From 2013 to 2014, the Indonesian government set the mandatory blending proportion of biodiesel in diesel to 10%, increased it to 15% in 2015, and then increased it to 20% in 2016. However, due to various reasons, such as the lack of domestic blending facilities and weak policy implementation, the actual blending proportion in 2014-2017 did not meet the requirements of mandatory blending.


However, this situation has changed since 2018. On the one hand, the domestic palm oil production in Indonesia has increased substantially, and the pressure on raw material inventory has been increasing; on the other hand, the export environment has been deteriorating, and in 2019, the EU re imposed anti dumping duties on Indonesia’s biodiesel, and due to environmental protection issues, it is proposed to implement the ban on palm oil biodiesel, while the United States since 20 Since 17, countervailing duties have been imposed on Indonesia’s biodiesel. In the context of internal and external troubles, the Indonesian government tries to expand the domestic demand of biodiesel, strengthen the implementation of policies, and increase the actual blending rate to 20% in 2019, which is expected to reach the goal of B20 plan.


The Indonesian government will implement the B30 plan from January 1, 2020. It is expected that the actual mixing rate will reach 25% – 30% in 2020, which will bring about an increase in palm oil demand of 1.4-2.7 million tons. However, the export is expected to continue to decline, with a decrease in palm oil demand of about 650000 tons. As a whole, the implementation of B30 plan in Indonesia will increase the demand of 750000-2050000 tons of palm oil.


Malaysia: rapid growth of production, capacity or “ceiling”


In 2014, the Malaysian government implemented the B5 plan nationwide. In 2015, it was increased to B7 (7% biodiesel blending), and in 2019, it was increased to B10 (10% biodiesel blending).


Under the circumstance of high subsidy in China, the production profit of biodiesel in Malaysia is good. In recent years, the growth rate of biodiesel production has been maintained at 30%. However, at this stage, the capacity of biodiesel in Malaysia is 2 million tons. Limited by the capacity pressure, it is estimated that the capacity of biodiesel in 2020 will be 1.8 million tons, bringing about an increase in palm oil demand of 350000 tons.


It is reported that the Malaysian government plans to implement the B20 plan in advance at the beginning of 2020, but if the domestic production capacity cannot be expanded, it can only change the export and domestic demand structure of biodiesel, i.e. increase domestic demand and reduce export, which has little impact on the overall biodiesel production.

EU: slow growth of domestic demand and continuous trade protection


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In 2018, the EU’s biodiesel production reached 12.5 million tons and consumption was 14 million tons. Unlike Indonesia and Malaysia, in the international trade of biodiesel, the EU mainly imports. In 2018, the imports reached 3 million tons, significantly higher than in previous years, mainly due to the significant increase in the imports of Argentina and Indonesia. On November 26, 2013, the EU formally imposed a five-year anti-dumping duty on the biodiesel imports from Argentina and Indonesia. However, before the five-year period, Argentina won in the WTO in 2017 and Indonesia won in 2018. The cancellation of the anti-dumping duty led to a sharp increase in the EU’s biodiesel imports in 2018.


The raw materials of biodiesel produced in the EU are rich, mainly rapeseed oil; the second is waste edible oil, palm oil, soybean oil, etc. However, the cost of biodiesel produced from rapeseed oil is higher than that of palm oil and soybean oil. In order to protect its biodiesel industry, the EU has set up certain tariff barriers to Argentina, the United States and Indonesia for a long time.


In July 2009, the EU formally implemented a five-year double anti-tariff on biodiesel imported from the United States. In 2015, the period was extended to September 2020. Although Argentina and Indonesia won the case in the WTO, the EU had to continue to take measures to limit the exports of the two countries due to the large increase of exports to the EU in 2018. In December 2018, the European Commission proposed to resume the countervailing of Argentine biodiesel Tariff, the tax rate is set at 25% – 33.4%. After negotiation, in February 2019, the EU decided to exempt eight Argentine biodiesel producers, who were allowed to export biodiesel to the EU without paying tariff, as long as they were sold at the lowest price. In August 2019, the EU formally imposed an anti subsidy tax of 8% – 18% on biodiesel imported from Indonesia. The market expects that the EU will decide whether to impose a long-term anti subsidy tax on biodiesel exported from Indonesia to Europe in mid December.


In recent years, there have been some changes in the development of biodiesel within the EU. Due to the food and environmental protection issues involved, it is proposed to limit the consumption of biofuels based on food crops, increase the consumption of biofuels based on non food crops, and require Member States to reduce the proportion of using the first type of biofuels in the transport sector to 7% by 2020. The European Union renewable energy directive (redii) further requires that the mixing limit of the first type of biofuels based on food crops should be reduced from 7% in 2021 to 3.8% in 2030, and the mixing limit of the second type of biofuels should be increased from 1.5% in 2021 to 6.8% in 2030. It can be seen from the raw material structure of EU biodiesel over the years that the consumption of waste edible oil and animal oil is increasing year by year, while that of vegetable oil is declining to some extent, and this trend will continue in the future.


EU plans to ban palm oil-based biodiesel, and will gradually stop using palm oil to produce biodiesel before 2030, which will directly affect the import volume of 2.5 million tons of palm oil used to produce biodiesel. In addition, EU re imposes anti dumping tax on Indonesia biodiesel in 2019. In recent years, trade disputes between EU, Indonesia and Malaysia continue.


Looking forward to 2020, it is estimated that the domestic demand of EU biodiesel will remain stable with an increase of 300000 tons. In terms of import, due to the EU’s re restrictions on Indonesia and Argentina’s import, the estimated import reduction is 400000 tons.


The United States: rapid decline in imports and gradual increase in domestic demand


There are a wide range of raw materials for biodiesel production in the United States, of which soybean oil accounts for more than 60%. It is estimated that the output of biodiesel in 2019 will reach 6-6.5 million tons. In terms of import, in the past, the U.S. biodiesel import mainly came from Argentina and Indonesia. The import volume of the two countries increased rapidly from 2013 to 2017, when the U.S. Department of Commerce decided to impose countervailing tax on the import of biodiesel from Argentina and Indonesia, which restricted the import of biodiesel from the two countries. Thus, the import volume of biodiesel from the U.S. began to decline rapidly, from 2.3 million in 2016 Tons fell to 550000 tons in 2018.


The United States has a strong support for agriculture, so it has also introduced corresponding incentive policies for biodiesel. On the one hand, since 2010, the U.S. Environmental Protection Agency has set a minimum annual use of biodiesel, such as 800 million gallons in 2011, 2.1 billion gallons in 2018, 2.43 billion gallons in 2019, 2.43 billion gallons in 2020, and the current U.S. production capacity is 2.55 billion gallons, about 8.4 million tons; on the other hand, the U.S. Environmental Protection Agency has set a minimum annual use of biodiesel On the one hand, biodiesel has a subsidy of US $1 / gallon and a tax credit policy.


In 2020, under the condition of unchanged policy, the import of biodiesel from Argentina and Indonesia will still be limited. It is expected that the net import of biodiesel from the United States will be the same as that in 2019, maintaining at the level of 200000 tons. In order to meet the minimum usage standard of the United States Environmental Protection Agency, the domestic demand and production will continue to increase, with an estimated increase of 500000-1 million tons. The raw material end and vegetable oil will increase The volume is 400000-800000 tons, including 250000-550000 tons of soybean oil.

Brazil: self-sufficiency, increasing production


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Biodiesel produced in Brazil is mainly made of soybean oil, supplemented by butter, accounting for 70% – 80% of the total, which is in a self-sufficient market with small import and export volume. It is estimated that the output will reach 5 million tons in 2019.


Its biodiesel policy has been steadily promoted. In early 2008, the compulsory blending standard was set at 2%, in the second half of the year, it was increased to 3%, in 2009 to 4%, in 2010 to 5%, in 2014 to 7%, in 2016 to 8%, in 2017 to 9%, in 2018 to 10%, and in 2019 to 11%.


It is estimated that the output of biodiesel in Brazil will increase by about 350000 tons in 2020, bringing about an increase of 200000 tons of soybean oil and 50000 tons of butter.


Argentina: hard work, export dawn


Argentina’s biodiesel production is also dominated by soybean oil. In 2019, the output of biodiesel is estimated to be 2.2 million tons. The difference in export tax rates between raw materials and biodiesel (high raw materials, low biodiesel), makes Argentina play a major role in the international trade of biodiesel. In recent years, Argentina has been struggling against the trade barriers of the European Union and the United States, but at this stage In February 2019, the EU exempted 1.13 million tons of biodiesel imports from Argentina that met the established lowest price (soybean oil price + production cost). In 2018, Argentina exported 1.4 million tons of biodiesel to the EU. In August 2019, the United States adjusted Argentina’s countervailing duty from 72% to 10%, but the antidumping duty has not been cancelled, which is 75%. Argentina’s biodiesel export window to the United States The export volume of biodiesel in Argentina is estimated to be 1 million tons in 2019.


Argentina’s earliest biodiesel policy was clause 26.093 in 2006, i.e. reaching the goal of b5 in January 2010, implementing B7 plan in February 2010, and increasing to B10 in April 2016. In 2017, the actual mixing rate of Argentina has reached more than 9%. It is expected that the domestic demand will remain stable in 2020, the export will slightly decline by 100000 tons, the output will decrease by 100000 tons, and the soybean oil will be reduced by 100000 tons.