China grants 828,000 mt/year SAF export quotas to three producers

China has authorized three producers to export sustainable aviation fuel, granting them a combined quota of 828,000 metric tons/year to supply global markets with cleaner aviation fuels, sources with knowledge of the matter told Platts, part of S&P Global Energy, on Oct. 14.

The three producers are Shandong Sanju Bioenergy, which received a quota of 158,000 mt/year; EcoCeres, allocated 300,000 mt/year; and Shandong Haike Chemical, granted 370,000 mt/year.

This brings China's total number of SAF-approved export facilities to four, with a combined quota of 1.2 million mt/year, following the initial authorization in April of a Lianyungang-based plant, Zhejiang Jiaao Enprotech, which received a quota of 372,400 mt/year.

China's SAF export capacity expansion comes amid growing global pressure on airlines to reduce carbon emissions.

Three biofuels trading sources based in China and Singapore estimated that the three newly approved SAF producers would be able to deliver the SAF cargoes to Europe by the end of the year.

Shandong Haike Chemical, which began operations in March, is now set to export 40,000-60,000 mt of SAF in the near term, according to a company source, speaking on condition of anonymity. "We will be able to commit our contracts signed before," the company source said.

EcoCeres has demonstrated consistent growth in recent years, with export volumes rising to about 280,000 mt in 2023 from 50,000 mt in 2020, a market analyst said.

The development follows the Sept. 30 designation of Rizhao city in Shandong province as China's second SAF export pilot city, approved by four central government agencies, including the Ministry of Commerce and the National Energy Administration.

The export allocation enables producers to commence shipments as early as October, with several companies reportedly having already completed loading operations at Tianjin port, potentially establishing new export channels that could reshape traditional trade patterns, according to an analyst in Shandong.

To ease tightness in EU

The supply from China will largely ease the tightness on the European market, "and we might see European SAF prices cool down a bit," said a trader source based in Singapore.

Weijun Chua, a principle analyst with S&P Global Energy, said: "This further enforces the stance of Asia as a SAF-exporting region to Europe, which is estimated to demand 1.5 million mt of SAF in 2026.

"At the moment, SAF is excluded from the antidumping duty imposed by the European Union and UK government," Chua said. "This would put pressure on the competitiveness against Europe and Singapore SAF production."

A biofuels trader based in China said EU producers that still have SAF inventories need to accelerate the offloading of their cargoes, before imports increase and prices decline.

A producer source based in Singapore said: "I think the European market will generally be open to the SAF exports from China, at least for the remainder of the year, as there is indeed a certain shortness in meeting the 2% blending compliance at the moment."

Platts assessed SAF FOB Straits at $2,650.6/mt on Oct. 13. The Platts CIF Northwest Europe SAF assessment was at $2,773.5/mt Oct 1.

Platts assessed UCO FOB North Asia at $1,111/mt Oct. 14, up $8/mt from Oct. 13. UCO FOB Straits was unchanged at $1,155/mt over the same period.