Asia PME biodiesel stable; exports face challenging outlook

SINGAPORE (ICIS)–Prices of palm methyl ester (PME) biodiesel in southeast (SE) Asia are expected to see little upside ahead as obstacles persist for regional exporters.

In the week ended 7 December, prices were steady at $700-750/tonne FOB (free on board) SE Asia, according to ICIS data. Dealings were muted, with hardly any discussions for export cargoes to the EU.

“It has been quiet. Not sure if it’s because it’s almost the year-end,” a market source said.

In Asia’s palm oil markets, futures prices on Bursa Malaysia were down by about 1-2% compared with the previous week. Prices were under pressure on concerns of weaker demand from the main palm oil export markets in the coming months, according to media reports.

Biodiesel is a biofuel produced from renewable resources and the most commonly used feedstocks are rapeseed, soy and palm oil.

In the domestic markets in Indonesia and Malaysia, producers mostly sell PME to meet local blending requirements.

Meanwhile, export demand may not get a strong boost in Europe, as PME is considered less-suited for European winter conditions, due to its higher freezing point.

Prices of alternatives such as rapeseed methyl ester (RME) in Europe have also been under pressure as producers ramped up production for the busier winter months.

In Argentina, prices of soy methyl ester (SME) for export on a free on board (FOB) Rosario/San Lorenzo basis were also lower this week due to declines in feedstock soybean oil, further limiting European demand for PME.

The EU is the largest export market for Malaysian biodiesel but exports have been slowing down. Latest data from the Malaysian Palm Oil Board (MPOB) showed total exports of palm biodiesel in October were 33.6% lower month on month, while palm oil shipments increased over the same period. November exports data are due to be published around 12 December.

Looking ahead, the export market is expected to continue to be challenging for southeast Asia’s biodiesel producers.

The EU currently imposes anti-dumping duties of between 8.8-20.5% on Indonesian biodiesel. There is an ongoing investigation by the World Trade Organisation (WTO) into whether the EU’s ADDs on Indonesian biodiesel are fair, with a decision expected by the end of the year.

This week, the US International Trade Commission (ITC) determined in a 4-0 vote that the US biodiesel industry is materially injured by biodiesel imports from Argentina and Indonesia. As a result of the ITC’s affirmative determinations, the commerce department will impose countervailing duty on imports of biodiesel from Argentina and Indonesia.

In November, the US also announced anti-subsidy duties of 71.45-72.28% for soy-based biodiesel from Argentina; and 34.45-64.73% for palm oil-based biodiesel from Indonesia.

Focus article by Izham Ahmad

Picture: Palm oil plantation in central Kalimantan, Indonesia. (Source: ROM/imageBROKER/REX/Shutterstock)