KUALA LUMPUR, Aug 16 (Bernama) -- Asian biodiesel producers may need to partner locally in order to penetrate the US market, said Chuckanut Capital Management Group Ltd senior director, Dr J. Greig.

"Asian methyl esther producers wishing to get into the US market will have some strong barriers on the tariff and political side. Partnering with US groups will make these barriers more manageable and less aggressive," he said in a statement issued by CoreVentus Malaysia here Wednesday.

The statement was released by CoreVentus prior to the two-day international conference on "Biodiesel: Renewable Energy" to be held Aug 22-23.

Greig said based on the size of the distillate market, Asian producers might have more growth capability in the long run, but the short run economics were "a bit fuzzy".

The biodiesel is a mature industry in Europe and a great model for the rest of the world while in the US, biodiesel has benefited from the expansion and growth of the ethanol industry and is riding the next-wave bandwagon.

"Government mandates and alternative fuel usage laws are also driving biodiesel markets in South America, while in Asia it has been spurred by the promise of high off-take prices relative to low production costs of palm oil as feedstock," said Greig in the statement.



He said the United States and Europe biodiesel market would consolidate in five years with annual production peaking at five billion gallons (18.9 billion litres).

"Only players with operational models with low cost of production and higher margins will survive the coming feedstock price hike."

He said the consolidation of principle players would occur in three to five years and the potential producers in Asia might face similar challenges as those in the US and Europe in terms of crop availability, demand and pricing.

"You must take into consideration the availability of low cost feedstock, the operational models the plants will run on and the technological advances which lower production cost."

He said these factors might make or break the industry.

Meanwhile, the biodiesel-related conference is expected to see the participation of 15 speakers and 100 participants.