FocusPME Exports from Indonesia will fall during Ramadan - sources
06 August 2012 10:33 [Source: ICIS news]
SINGAPORE (ICIS)--Biodiesel exports from ?xml:namespace>Indonesia, the major source of palm methyl ester (PME) worldwide, are expected to decline in August because of slower manufacturing activities during the ongoing Muslim fasting month of Ramadan, market participants said on Monday.
It is typical for manufacturing operating rates to decrease during Ramadan, which started on 20 July this year, as some factories undergo maintenance shutdowns and as some of the workers work shorter hours, they added.
Exports from Indonesia, all to Europe, are typically above 80,000 tonnes each month, sellers said. Indonesia exported 69,020 tonnes of PME in May, compared with January (101,818 tonnes), February (78,412 tonnes), March (84,760 tonnes), and April (109,740 tonnes), according to a market source. The statistics for June were not immediately available.
Indonesia’s tax rates for PME and the raw material crude palm oil (CPO) in August remain unchanged at 2% and 15% respectively from July. The rates are updated monthly by the country's Ministry of Trade. The taxes were implemented, particularly for CPO, as a trade barrier for exports and to encourage downstream derivatives production, said market participants.
Indonesia remains the only PME-exporting country in southeast Asia as local producers have access to a large availability of cheap palm oil because of the high CPO export tax rates.
“I think this [downtrend in exports] is set to stay until after the winter season,” said a seller.
Prices were assessed at $980-1,030/tonne (€794-834/tonne) FOB (free on board) southeast (SE) Asia last week, according to ICIS.
PME prices tended to move in the range between the cost of production from CPO and gasoil or diesel prices, said market participants.
Sellers will set their prices after factoring the cost of purchasing CPO, a traded commodity with an added production premium, while buyers from oil companies will bid at current gasoil or diesel prices.
PME is not suitable for use in cold climates because of its high cold filter plugging points (CFPP). This is the temperature which the biodiesel will start to clog the fuel filters in engines.
The biodiesel blend in Europe will consist of rapeseed and other vegetable oil-derived methyl esters as substitutes to palm-derived methyl ester.
Meanwhile, exports from Malaysia, the other large palm oil-producing country, continue to be negligible, said domestic PME makers, as they face higher feedstock costs. There is a 30% export tax imposed on CPO in Malaysia only after a duty-free limit of 3.6m tonnes, according to market sources.
Only some of the 29 PME factories in the country are still operating, and this is to support the local biodiesel mandate, not for exports, Malaysian PME refiners said.
In Philippines, the production of a different type of biodiesel derived from coconut, called coconut methyl ester (CME) was heard to be thriving but the output mainly supports the local oil industry, said a Philippine distributer that supplies raw material to CME makers.
In Thailand, local output went into supporting mandates of blending 5% or 10% biodiesel into gasoline, said market participants.
Indonesian PME producers include Wilmar and Musim Mas.
($1 = €0.81)By: Heng Hui+65 6780 4359
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