16 July 2012 07:20 [Source: ICIS news]
By Heng Hui
However, biodiesel makers in
Indonesian biodiesel makers can sell their PME at lower prices than Malaysian producers, since their feedstock cost is lower, said Malaysian PME converters.
In 2011, Indonesian PME refiners exported around 1.4m tonnes out of their total production of 2.2m tonnes to Europe, mainly Spain and Italy, according to industry sources. The producers’ market share in
Only some of the 29 PME factories in
“It will be good if we could reform the tax structure to something similar to Indonesia’s, or increase the export tax for CPO to a sufficient level such that the cost of PME manufacture in Malaysia becomes competitive with Indonesian PME,” a Malaysian biodiesel maker said.
With such an export tax in place, Malaysian biodiesel makers will enjoy lower-priced feedstock and be able to compete on the same level, he explained.
However, a biodiesel trader said it is unlikely that any action will be taken before the Malaysian election, since the move will benefit only a few biodiesel corporations and anger many small palm oil farmers, driving away votes.
“It’s a political issue. It’s unlikely the government would introduce any tax in the near term because this would greatly depress CPO prices. The government would become greatly unpopular since the country’s stock exchange has also just listed one of the world’s biggest IPO [initial public offering] of palm oil giant Felda,” the trader said.
A biodiesel maker in
However, a market participant in Malaysia pointed out Indonesian’s CPO refining capacity is rapidly expanding at a rate far beyond the actual CPO production, and demand for CPO raw material in Indonesia will increase, boosting the prices of CPO and hence PME in Indonesia.
However, it remains unlikely that Indonesia CPO prices will increase to the extent that the costs of PME production become on par with
Southeast Asian PME producers include Wilmar and Musim Mas.
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