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Malaysia's move to B10 biodiesel will raise CPO consumption to 1.2 mil mt/year

Kuala Lumpur (Platts)--3 Mar 2015 518 am EST/1018 GMT


Malaysia will consume 1.2 million mt/year of crude palm oil once the country fully implements B10 biodiesel across the country, secretary general of the Ministry of Plantation Industries and Commodities Himmat Singh said at the palm and lauric oils conference in Kuala Lumpur Tuesday, March 2.

"We will also explore the implementation of biofuel program in other sectors such industry and power generation," Singh said.

He added that the ministry was exploring the implementation of B10 -- gasoil blended with 10% palm methyl ester -- nationwide this year.

Trade sources said the move will support CPO prices as there are concerns that production will come back up in April and May amid forecast of good yield.

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Malaysia produced 19.6 million mt of CPO last year, up from 19.2 million mt in 2013, data from the Malaysian Palm Oil Board's website showed.

Last year, exports of palm oil product were valued at MR66.12 billion ($18.24 billion), accounting for 8.6% of total merchandise exports from Malaysia, according to Singh.

Currently, Malaysia consumes about 600,000 mt of CPO under a 7% blend of PME and gasoil, Malaysian Biodiesel Association's vice president U R Unnitha told Platts Tuesday.

The B7 mandate was implemented across Peninsula Malaysia in November 2014.

There 21 biodiesel producers in the Malaysian Biodiesel Association, but only seven are said to be actively running their plants and producing PME to meet the biodiesel mandate, said trade sources.

Biodiesel production for the B7 mandate averages 1,000-3,000 mt/month at each producer, Malaysian PME producers said.

Only one to two producers had a 6,000 mt/month offtake, trade sources said.

Malaysia's nameplate biodiesel capacity of its 21 members is 2.7 million mt/year, but current utilization is only 22%, said Unnithan.

Moving to the higher B10 mandate would see producers increasing their plant utilization rate to 37%, he said.

--Esther Ng, esther.ng@platts.com
--Edited by Irene Tang, irene.tang@platts.com



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