MARKET DEVELOPMENT
Fatty Alcohol Exports Seen Plunging Amid Safeguard Investigation
Fatty Alcohol Exports Seen Plunging Amid Safeguard Investigation
07/07/2014 (Jakarta Post) - Indonesia expects a considerable drop in exports of fatty alcohol to India following an ongoing safeguard investigation into the product.
The Trade Ministry’s director general for foreign trade, Bachrul Chairi, said Friday that sales of fatty alcohol in India might tumble by between 30 percent and 40 percent of its overall exports, which totaled around US$120 million each year.
“We still consider it within ‘normal’ range and we have taken necessary efforts to reach a solution with India,” he told reporters at his office.
Bachrul further said that Indonesian officials had already addressed this issue with their Indian counterparts, pointing out that the arguments they conveyed would not be strong enough grounds to claim injury in the Indian domestic industry.
Indian authority is now assessing input from countries affected by its probe, according to Bachrul.
India, the worlds biggest buyer of palm oil, launched the investigation into imported fatty alcohol on Feb. 13 following a petition from its domestic industry, which accused that surging imports had caused serious injury.
Along with an upward trend in the import of palm oil derivatives, the share of the domestic industry in its overall sales have decreased, according to India’s notification to the World Trade Organization (WTO).
The profitability of its local industry has also significantly dropped, resulting in financial losses.
Under WTO rules, the safeguard investigation could lead to the imposition of punitive duties to counter the negative impact of an influx of imports on the alleging country. That should be placed at the latest 200 days after the probe is initiated.
India has been the largest export destination for palm oil from Indonesia, the world’s top palm oil producer. Last year it bought around 6.1 million tons of palm oil, comprising crude palm oil (CPO) and refined oils, from Indonesia. The figure was a 5.17 percent rise from 2012.
That gave a marked contribution to overall Indonesian palm oil exports at above US$19.2 billion last year, or 13 percent of total non-oil and gas exports, according to the Central Statistics Agency (BPS).
The rise of palm oil derivative imports from Indonesia has been a concern for India in the past few years, as Indonesian producers have boosted their refinery capacities driven by export taxes that keep raw materials local.
Fatty alcohol, along with fatty acid, has become a constant subject of disputes between Indonesia and its trading partners. The European Commission charged antidumping duties in November 2011 on
imported fatty alcohols from Indonesia, claiming that the products were sold to the 28-nation group under production costs or below domestic sales prices.
Indonesia has advanced to the world trade governing body to seek settlement in the dispute.
Deputy Trade Minister Bayu Krisnamurthi said that the estimated decline would be a worst case scenario. However, as Indonesian refiners have already adopted advanced technology for the production of palm oil derivatives, they could easily shift their output from fatty alcohol to other products.
“It [the safeguard investigation] is certainly a concern for us, but we should not worry about it,” he said.
The Trade Ministry’s director general for foreign trade, Bachrul Chairi, said Friday that sales of fatty alcohol in India might tumble by between 30 percent and 40 percent of its overall exports, which totaled around US$120 million each year.
“We still consider it within ‘normal’ range and we have taken necessary efforts to reach a solution with India,” he told reporters at his office.
Bachrul further said that Indonesian officials had already addressed this issue with their Indian counterparts, pointing out that the arguments they conveyed would not be strong enough grounds to claim injury in the Indian domestic industry.
Indian authority is now assessing input from countries affected by its probe, according to Bachrul.
India, the worlds biggest buyer of palm oil, launched the investigation into imported fatty alcohol on Feb. 13 following a petition from its domestic industry, which accused that surging imports had caused serious injury.
Along with an upward trend in the import of palm oil derivatives, the share of the domestic industry in its overall sales have decreased, according to India’s notification to the World Trade Organization (WTO).
The profitability of its local industry has also significantly dropped, resulting in financial losses.
Under WTO rules, the safeguard investigation could lead to the imposition of punitive duties to counter the negative impact of an influx of imports on the alleging country. That should be placed at the latest 200 days after the probe is initiated.
India has been the largest export destination for palm oil from Indonesia, the world’s top palm oil producer. Last year it bought around 6.1 million tons of palm oil, comprising crude palm oil (CPO) and refined oils, from Indonesia. The figure was a 5.17 percent rise from 2012.
That gave a marked contribution to overall Indonesian palm oil exports at above US$19.2 billion last year, or 13 percent of total non-oil and gas exports, according to the Central Statistics Agency (BPS).
The rise of palm oil derivative imports from Indonesia has been a concern for India in the past few years, as Indonesian producers have boosted their refinery capacities driven by export taxes that keep raw materials local.
Fatty alcohol, along with fatty acid, has become a constant subject of disputes between Indonesia and its trading partners. The European Commission charged antidumping duties in November 2011 on
imported fatty alcohols from Indonesia, claiming that the products were sold to the 28-nation group under production costs or below domestic sales prices.
Indonesia has advanced to the world trade governing body to seek settlement in the dispute.
Deputy Trade Minister Bayu Krisnamurthi said that the estimated decline would be a worst case scenario. However, as Indonesian refiners have already adopted advanced technology for the production of palm oil derivatives, they could easily shift their output from fatty alcohol to other products.
“It [the safeguard investigation] is certainly a concern for us, but we should not worry about it,” he said.