U.S. imports of used cooking oil (UCO) from China are projected to reach record levels in the coming months, despite ongoing regulatory uncertainties that could impact the future of this trade. The surge in U.S. demand for UCO, primarily used as a feedstock for biofuels like renewable diesel, has been fueled by federal and state incentives aimed at decarbonizing transportation. Consequently, U.S. renewable diesel production capacity has more than doubled since 2021, reaching 282,000 barrels per day in 2023.
As a result of this increased demand, the U.S. transitioned from being a net exporter of UCO until 2021 to becoming a net importer since 2022. Last year, imports surpassed 1.36 million metric tons, a significant rise from about 400,000 metric tons in 2022.
Duane Dunlap, owner of the consultancy DNS Enterprises, noted that the demand for UCO from U.S. renewable diesel producers has outpaced domestic supply. This gap has been filled by Chinese exporters, who have sought new markets after demand from Europe declined due to complaints about artificially low prices, leading to an EU investigation and subsequent tariffs on Chinese biodiesel.
In 2022, imports from China constituted only 0.1% of UCO purchased by U.S. refiners, but this share increased to 50% last year. By mid-2023, China accounted for around 60% of the approximately 1 million metric tons of UCO imported by the U.S.
The imposition of EU tariffs is expected to further boost UCO shipments from China to the U.S., as traders anticipate that if the product is not wanted in Europe, it will be redirected to the American market.