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Indonesia to boost Malaysia to slowdown biodiesel exports

Indonesia to boost Malaysia to slowdown biodiesel exports

JAKARTA: Indonesian biodiesel makers are gearing up to boost exports after the European Union removed anti-dumping duties on shipments from some producers in the country, but rival suppliers in Malaysia are bracing for a slowdown in the wake of the move.

After legal proceedings at the European Court of Justice, the EU last month removed duties on biodiesel imports for 13 Indonesian and Argentine producers that had been in place since 2013.

The move is set to be a boon for Indonesia, the world’s top supplier of palmoil-based biofuel, but is expected to hit Malaysian exporters hard as they lose market share due to higher costs in their smaller-scale biodiesel industry.

Traders estimate Malaysian prices for a ton of biodiesel are typically US$30 to US$40 more expensive than Indonesian cargoes. Both nations use palm oil from their vast plantations to churn out biodiesel.

Prices of Malaysian palm methyl ester, the bio component of biodiesel that comes from palm oil, traded at US$747 a ton on Thursday, versus US$711 in Indonesia, according to a trader.

“Some (Indonesian) companies have already started shipping (to Europe),” said the chairman of the Indonesia Biofuels Producer Association (APROBI), MP Tumanggor.

He expects Indonesia to ship around 432,000 tonnes of biodiesel to the EU this year, up from virtually nothing in 2017.

That would still be a way off the 1.4 million tonnes exported the year before the EU duties were introduced, although a Malaysian-based biodiesel trader said Indonesia could ship up to 80,000 tonnes a month from here on in. He declined to be identified as he was not authorized to speak with media.

Weaker export demand for Malaysian biodiesel is expected to curb utilization rates at the country’s production plants.