Tuesday July 27, 2004 - CRUDE palm oil (CPO) prices, which have been underpressure, are expected to hover between RM1,400 and RM1,600 per tonne,according to IOI Corp Bhd group executive director Datuk Lee Yeow Chor.

The price of CPO would find support from the tight stock usage ratio, hesaid.

Concerns over the prospects of higher edible oils production, especiallyUS soyaoil, and lower demand from China, have contributed to the sharpdecline in CPO prices.

Speaking to reporters on the sidelines of the MYRinggit conferenceorganised jointly by ECM Libra Bhd and The Edge in Kuala Lumpur yesterday,Lee said demand for CPO from China dipped briefly for one month, but wasnow back to normal.

China is still buying CPO, he said, adding that the price of CPO hadfallen primarily due to the anticipation of an increase in supply ofedible oils.

Lee said the group's proposed acquisition of Soctek Sdn Bhd, a companyinvolved in the refining and trading of crude palm oil, for RM89.2mil fromUgreat Holdings Pte Ltd was favourable to the IOI Group. It would havetaken two years to build a similar plant in Malaysia, he said.

Loders Corklaan BV, a wholly-owned subsidiary of IOI Corp Bhd, plans tobuy Soctek.

In a statement last week, IOI Corp said the proposed acquisition wouldprovide Loders Croklaan with a competitive manufacturing base in Asia,enhance its supply chain efficiency and accelerate expansion efforts.

It said the deal would also see the establishment of a local specialtyfats processing base to facilitate the transfer of technology from Europeto Malaysia.

Lee said the acquisition caters for the rising demand for speciality fatsin the Asia-Pacific, and the additional production in Malaysia would allowIOI Corp to complement the production of speciality fats from Loders inHolland.

He added that funding the acquisition would not be an issue as the group'scurrent gearing was around 30%. The group generates sufficient cashflow toreduce gearing by 10-percentage points each year if it does not make anyacquisition.