- China’s removal of the 13% export tax rebate on used cooking oil (UCO) aims to boost domestic supply for Sustainable Aviation Fuel (SAF) production.
- Reduced UCO exports to the EU and US will have minimal impact on chemical shipping due to low volumes.
- The absence of EU tariffs on Chinese SAF imports could allow SAF to replace lost UCO trade.
According to Drewry, China’s policy changes on UCO trade aim to meet domestic SAF production goals but will slightly tighten global UCO supply, with minimal effects on chemical shipping due to the low volumes involved.
China’s UCO Export Tax Rebate Removal
On December 1, 2024, China removed the 13% export tax rebate on UCO to boost domestic SAF production, aligning with its 2% SAF blend mandate for 2025.
The change is expected to raise global UCO prices while enhancing the competitiveness of Chinese SAF exports.
Shifting Trade Dynamics for UCO
EU anti-dumping tariffs on Chinese biodiesel in 2023 reduced biodiesel exports, but UCO exports rose due to tariff exemptions.
The US became an alternative market, incentivized by the Inflation Reduction Act, despite concerns about supply chain contamination and regulatory scrutiny.
Implications for Chemical Shipping
China’s reduced UCO exports will tighten global supply but have negligible effects on chemical shipping, with demand reduction equating to six MRs.
However, potential SAF exports to the EU could offset losses in UCO trade, supporting biofuel mandates and decarbonization goals.
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Source: Drewry
