Garware Polyester upbeat about biodiesel market

06 December 2006 09:48  [Source: ICIS news]

SINGAPORE (ICIS news)--Garware Polyester is upbeat about the prospects for biodiesel as more legislations will promote the use of this fuel especially in Europe, said a company official on Wednesday.

The Indian producer converted its dimethyl terephthalate (DMT) plant in Maharastra state to produce 175,000 tonnes/year of biodiesel this year, Hemang Goradia, its general manager, said.

Besides increasing use of the fuel, India could announce some tax rebates for local producers in the 2007 Union Budget to boost the use of biodiesel, Garware said.

The company used palm fatty acid distillate (PFAD) as a feedstock to make biodiesel and the process does not yield glycerine, he added.

In recent months, several Asian biodiesel producers have had to grapple with the disposal of crude glycerine byproduct as the market for it remained very limited.

PFAD is a byproduct of crude palm oil distillation and is available locally at prices 20-25% lower than refined bleached deodorised (RBD) palm oil.

Recent increases in palm oil prices and a decline in diesel prices on lower crude oil costs has squeezed the margins of biodiesel makers, Asian producers said.

Biodiesel spot prices are at $670-720/tonne FOB Asia to Europe. In contrast, diesel prices are at $600-650/tonne FOB Singapore and are exerting downward pressure on spot biodiesel values.

Feedstock prices, especially palm oil, have jumped nearly 30% from mid-2006 to ringgit (M$) 1,850/tonne ($529/tonne). Prices for the other feedstock, methanol, surged 70-80% this year to $480-500/tonne CFR Asia.

The other challenge facing Asian biodiesel makers is that palm-based material is not suitable for use in winter months. Very few Asian makers can winterise the biodiesel, or make it suitable for use at low temperatures, as this leads to a significant drop in the yield of biodiesel.

So in winter months, the product would be sold within India, said Goradia.

($1=M$3.5)

By: Anu Agarwal
+65 6780 4359

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