The shortage of diesel may be a deadly tumor to most private gas stations, but it is a good chance to make a fortune for the diesel producers, especially bio-diesel producers.
Statistics in early November 2010, from China General Chamber of Commerce, shows that over 2,000 private-owned gas stations shut down due to serious shortage of diesel supply in most areas of southern China, and some developed provinces like Guangdong, Jiangsu and Zhejiang are the harder-hit areas. Until mid-November, the shortage situation is still haunting around these areas and tending to spread into other large cities, like Beijing, Shanghai, Chongqing, etc.
Many bio-diesel producers in China, such as Zhejiang Eastriver Energy S&T Co. Ltd. (Zhejiang Eastriver) disclosed that they were in badly need of biodesel under the shortage circumstances lately. And the average daily demand for bio-diesel of the company had risen greatly after the outbreak of diesel shortage.
Before the shortage of diesel, domestic bio-diesel industry has been developing hard with serious overcapacity. One reason is that bio-diesel is not allowed to be sold like other conventional oils in the state-owned gas stations, accounting for over half of the total domestic gas stations, which is the main obstacle preventing bio-diesel accessing to the market. Moreover, the fundamental reason lies in the price competitiveness of conventional diesel over bio-diesel, which is caused by high production cost of bio-diesel. At present, most domestic bio-diesel producers use drainage oil as raw material, and the price of it has increased twice compared with three years ago, leaving slim or even negative profit margin for the bio-diesel producers if they sell at the same price as that of the conventional diesel. Therefore, seeking the "affordable" raw material is the top priority for the bio-diesel producers in China at the moment, which may be also the only way out for the whole industry.
The B5 standard issued on September 26th this year allows the domestic bio-diesel to officially enter into the regular distribution channels next February, but, as mentioned above, how can the bio-diesel capture the market at the same time if its raw material price keeps so high? After the shortage storm, will the bio-diesel business have to meet challenges again?
For more information about this visit CCM's Industrial Biotechnologies China News at http://www.cnchemicals.com/Newsletter/IndustrialBiotechnologyNews.shtml
About CCM
CCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff of more than 150 dedicated highly-educated professionals. CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its new proprietary product ValoTracer.
Please visit http://www.cnchemicals.com for more information or contact econtact@cnchemicals.com
CCM International, Ltd.
Guangzhou CCM Information Science & Technology Co, Ltd.
17th Floor, Huihua Commercial & Trade Mansion No, 80 Xianlie Zhong Road, Guangzhou 510070, China