Asia PME to face weaker demand on German law

23 October 2008 10:34  [Source: ICIS news]

SINGAPORE (ICIS news)--The new legislation passed by the German government limiting the use of soy and palm oil biodiesel has sent shockwaves through the already battered Asian palm methyl ester (PME) industry, market sources said on Thursday.

The German Environment Ministry announced on Wednesday that palm and soy based biodiesel would not be credited against biofuel quotas unless the new sustainability quotas - to be announced by the EU - were met.

While some regional sellers pointed out that such a ruling would not be feasible and would probably not come into effect, traders remained concerned over the impact of the new law.

"Now, only one (palm) plantation has the Roundtable on Sustainable Palm Oil (RSPO) certificate (of sustainable palm oil), how can it be enough to supply all the biodiesel plants here?" asked a trader based in Malaysia.

Other biodiesel sellers in the region said that with buying interest from the US muted with the introduction of new standards recently announced by the American Standards of Testing and Materials (ASTM), the position of PME sellers has turned weaker.

While a PME broker in Singapore was slightly upbeat, pointing out that the other European states such as Spain and Italy could still accept Asian PME cargoes, the Malaysian trader remained pessimistic.

"Now that Germany is implementing this law, I’m just worried that the other European nations will follow suit," he said.

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By: Jeremiah Chan
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