MARKET DEVELOPMENT
Malaysia Keeps Biodiesel Target despite Low Oil Prices
Malaysia Keeps Biodiesel Target despite Low Oil Prices
20/01/2016 (Reuters) – Malaysia is committed to its plan to raise its biodiesel mandate to 10 percent, undeterred by a slump in global fossil fuel prices, in a bid to boost demand for palm oil, the country’s plantation and commodities minister said yesterday.
The so-called B10 program, which mandates a minimum 10 percent of bio content in diesel, will help mop up more palm oil for blending purposes in the world’s No.2 producer of the tropical oil and underpin benchmark prices that are near a three-week top of 2,495 ringgit ($568.99) per ton.
Malaysia is in the final stages of consultation with stakeholders on the B10 program and will submit a cabinet paper on this by the end of February, Douglas Uggah Embas said at an industry seminar.
“Yes [oil prices] impacted but price is not our only consideration,” the minister said when asked if low oil prices would result in a change of plans. “There are various considerations and the sum of that will guide the government’s biodiesel utilization.”
Oil prices slumped to their lowest since 2003 this week as the market anticipated a rise in Iranian exports after the lifting of sanctions against Tehran over the weekend.
Industry officials and producers say Indonesia and Malaysia may have to curb plans to channel more palm oil into biodiesel as tumbling crude oil prices render the edible oil twice as expensive as its fossil fuel alternative. Indonesia expects to raise the minimum bio content of gasoil in the country by a quarter to 20 percent in 2016.
Analysts expect Indonesia to at best achieve a 10 percent mandate this year and Malaysia’s blending level to likely fall below its 2015 goal of 7 percent.
Palm oil was one of the few commodities to finish 2015 on a positive note, rising close to 10 percent, buoyed by talk of lower yields due to an El Nino weather pattern and expectations of higher biodiesel consumption.
“Biodiesel helps us to stabilize price, enables us to reduce stock by increasing domestic consumption, which has an impact on palm oil,” Uggah Embas said. “We have committed to reduce our carbon dioxide emissions in the country, by using biodiesel.”
The so-called B10 program, which mandates a minimum 10 percent of bio content in diesel, will help mop up more palm oil for blending purposes in the world’s No.2 producer of the tropical oil and underpin benchmark prices that are near a three-week top of 2,495 ringgit ($568.99) per ton.
Malaysia is in the final stages of consultation with stakeholders on the B10 program and will submit a cabinet paper on this by the end of February, Douglas Uggah Embas said at an industry seminar.
“Yes [oil prices] impacted but price is not our only consideration,” the minister said when asked if low oil prices would result in a change of plans. “There are various considerations and the sum of that will guide the government’s biodiesel utilization.”
Oil prices slumped to their lowest since 2003 this week as the market anticipated a rise in Iranian exports after the lifting of sanctions against Tehran over the weekend.
Industry officials and producers say Indonesia and Malaysia may have to curb plans to channel more palm oil into biodiesel as tumbling crude oil prices render the edible oil twice as expensive as its fossil fuel alternative. Indonesia expects to raise the minimum bio content of gasoil in the country by a quarter to 20 percent in 2016.
Analysts expect Indonesia to at best achieve a 10 percent mandate this year and Malaysia’s blending level to likely fall below its 2015 goal of 7 percent.
Palm oil was one of the few commodities to finish 2015 on a positive note, rising close to 10 percent, buoyed by talk of lower yields due to an El Nino weather pattern and expectations of higher biodiesel consumption.
“Biodiesel helps us to stabilize price, enables us to reduce stock by increasing domestic consumption, which has an impact on palm oil,” Uggah Embas said. “We have committed to reduce our carbon dioxide emissions in the country, by using biodiesel.”