Indonesian biodiesel producers are preparing for higher exports to Europe after the EU has had to abolish its anti-dumping tariffs on some oil mills in the Asian country.
Following the conclusion of proceedings before the European Court of Justice last month, the EU lifted the punitive tariffs on biodiesel imports from 13 Indonesian and Argentine producers since 2013.
This step is a blessing for Indonesia, the world's largest palm oil based biodiesel provider. By contrast, Malaysian exporters are likely to lose market share because production costs are higher there. Traders estimate production costs for Malaysian biodiesel to be $ 30 to $ 40 higher than Indonesian supplies. Both nations use palm oil from their huge palm plantations. Malaysian palm methyl ester trades at $ 747 / ton this morning. Indonesian palm methyl ester costs $ 711 / ton.
Some Indonesian producers, according to the association, are already shipping to Europe. Indonesia could deliver some 432,000 tonnes to the EU this year. In the previous year, almost no arrivals from Indonesia were registered here.
But that would still be much less than the 1.4 million tonnes imported from Indonesia the year before the punitive tariffs. Another Malaysian biodiesel retailer said Indonesia could now deliver up to 80,000 tons per month.
A weaker export demand for Malaysian biodiesel will mean that the country's oil mills will be less well utilized. Malaysian biodiesel export was quite good last year at 235,000 tons. In 2016, it was 83,000 tons. One was the beneficiary of the EU punitive tariffs against Indonesia. But now Malaysia is no longer competitive. The Malaysian exports will probably go to zero.
However, traders point out that soybean-based biodiesel is even more competitive than the biofuel from Indonesia.
Text: HANSA Derivatives Trading GmbH /
