Fields of canola in Alberta, Canada File photo: IG

Chinese industry insiders said they are diversifying their supply chains, while reducing purchases of Canadian canola oil amid rising prices, diplomatic tensions and the COVID-19 outbreak.

The remarks came after Reuters reported that Canadian canola oil producers are continuing exports to China.

Exporters are finding roundabout ways to reach top oilseed buyers in China, while Chinese traders are buying canola oil from Europe and the United Arab Emirates, with some of that oil made from Canadian canola, Reuters reported, citing unidentified traders in China.

However, several veteran industry insiders said Wednesday that they have greatly reduced imports of Canadian canola oil, regardless of where it comes from, because of rising bilateral tensions as well as higher prices.

Yu Cheng, a sales manager of Ningbo Sun Shui Man Enterprises, told the Global Times on Wednesday that the company is importing a very limited volume of Canadian canola oil, while actively seeking to diversify supply channels into other countries and regions including Russia and some EU countries.

The average price of domestic canola oil for catering is about 60 yuan forfive liters while the same quantity of Canadian canola oil is normally priced at more than 100 yuan on several e-commerce platforms, including Taobao.

Canadian canola is rather more costly than the domestic version and buying it indirectly from other countries would not make it cheaper, industry insiders said.

Canadian goods are generally more expensive than those that are made in China or in other countries, and they become more expensive with tariffs and rising transportation costs amid the COVID-19 outbreak, according to Yu.

"Prices are rising almost every month," Yu said, without revealing details on prices.

Wang Zimin, a purchasing manager with a private oil trading company in East China's Zhejiang Province, said that demand in China is still relatively low compared with the same period last year, which makes canola oil from countries like Canada less attractive than it used to be.

"Consumers are increasingly price sensitive," said Wang.

The reduction of planting area and canola yield in Europe and Canada contribute to the high prices, analysts said.

The global growing area of canola oil fell for two consecutive years, with countries such as Canada down 0.8 percent this year from the same period last year, according to a report by the industry information provider Grain News on July 31.

Meanwhile, as Canadian canola oil is losing attraction for many Chinese families and restaurants due to its high prices, other factors also play a part.

A manager surnamed Bian with a large logistics company based in South China's Guangdong Province told the Global Times that its imports of Canadian canola have fallen from six or seven containers per month on average to just one or even none due to rising tensions between China and Canada.

"Many of the dealers would not buy canola oil that is from Canada or originally from Canada. Shoppers have a choice, and the country's image has been affected by its approach to Chinese companies and citizens," Bian said.

Some traders are also looking into the domestic supplies to fill the gap. Domestic canola crops are growing well this year after the quick resumption of production.

The total planting area of canola seed in China is expected to exceed 6.66 million hectares this year, with an estimated output of 13.92 million tons, figures from financial data provider Tonghuashun said.

"We choose to import Canadian canola oil because we want to offer customers more options, but when the public chooses edible oil, it is actually acceptable as long as it is safe, healthy and affordable," said Yu, adding that domestic supplies are other alternatives.

The Canola Council of Canada did not respond to a request for comment as of press time.