‘OUTPUT MAY HIT RECORD LEVELS’
Production may reach 900,000 tonnes as diesel’s premium over palm oil widens
MALAYSIAN biodiesel production is likely to hit record levels this year and next year, with this year’s exports on track to double from last year, said the head of an industry association yesterday.
Malaysia is the world’s No. 2 producer of palm oil, which can be used as feedstock to make the bio components of biodiesel. The appeal of biofuel has risen due to the higher global oil prices.
“I believe Malaysian (biodiesel) production may hit 900,000 tonnes and 475,000 tonnes of exports if the current price differential between crude palm oil and petrol remains,” said U.R. Unnithan, president of the Malaysian Biodiesel Association.
“These would be record high (output and export) levels for Malaysia,” he said.
Malaysia churned out 720,410 tonnes of biodiesel last year and exported 235,291 tonnes, according to local data.
In July, Malaysia said it would raise its so-called biodiesel mandate next year to 10 per cent from the current seven per cent. The mandate refers to the percentage of bio-content that must be contained in biodiesel.
If the government went through with that plan and crude prices hold, Malaysia could produce up to 1.2 million tonnes of biodiesel next year, said Unnithan.
Diesel’s premium over palm oil has widened in recent months amid stronger crude prices and weaker palm markets. Its spread over palm hit US$219 (RM908.85) per tonne in early this month, its widest in four years, and was around US$178 yesterday.
Unnithan’s latest outlook marked an upward revision to estimates he made in April, when he said Malaysian biodiesel production could decline to 500,000 tonnes in the face of competitive shipments from Indonesia.
Diesel’s spread over palm was about US$20 a tonne at that time.