Swine fever outbreak cuts China UCO supplies

China is cracking down on the use and collection of used cooking oil (UCO) from pig farms after a swine flu outbreak in the north of the country spread further south late last year.

The use of food waste for animal feed is widely practiced despite being illegal, market participants said. But it is now being suppressed through tighter monitoring, which is limiting availability of UCO for biodiesel use by up to a third in the short term.

Farms sell their waste, as well as using it for their own animal feed. Smaller UCO collectors are used in many areas as they have lower overheads and face less regulatory oversight than bigger, certified outfits.

The fall in availability as a result of the cut to this supply line could push up prices for one or two quarters, until the larger collectors can set up their own distribution networks to take over sourcing from farms. But the industry should benefit in the longer term, as supplies that are not used for animal feed are redirected towards Ucome production or for export.

More sophisticated processing and stringent certification at established collectors will lead to a better quality product with lower free fatty acid levels of 1-5pc, traders said. Free fatty acid levels have been as high as 7pc previously, making supplies unsuitable for the EU market.

But traders estimate supply will fall by 15-30pc in the short term, which could lead to increased use of lower quality gutter oil recycled from sewage. Around 3mn t/yr of UCO and gutter oil is collected in China, which has around 1.5mn t/yr of export capacity.