In 2015, Malaysia's CPO futures were one of the best performing commodities despite the poor global economic situation. Because the country's biodiesel consumption plan is driving the development of the palm oil market. However, this is not good news for biodiesel producers because they are still suffering from the downturn in crude oil prices.
Global crude oil prices have plummeted since mid-2014, causing palm oil prices to be twice as expensive as fossil fuel substitutes. World palm oil producers Indonesia and Malaysia may have to control palm oil-biodiesel consumption plans: Indonesia is expected to In 2016, the biofuel blending rate in gasoline increased by a quarter to 20%, while Malaysia had planned to increase the biofuel blending rate from 7% in 2015 to 10%.
MCRhandran, a senior palm oil analyst at a consultancy in Kuala Lumpur, said he believes Malaysia and Indonesia will have to re-examine biofuel blending policies as both countries are also oil producers and exporters. In the case of falling crude oil prices, it is not economical to implement a biofuel blending policy. At present, gasoline is only half the price of palm oil.
Analysts expect Indonesia to achieve at least 10% of its biofuel blending target in 2016, while Malaysia's blending rate may be lower than 7% in 2015. But the Indonesian government said it would achieve a 20% biofuel blending target. According to Rida Mulyana, head of the Renewable Energy Office of the Indonesian Ministry of Energy, the most important thing is that the government will implement a 20% biofuel blending target. The new biofuel blend target aims to consume up to 3.4 million tons of palm oil stocks in Indonesia. Malaysia's palm oil stocks are also up to one million tons. Biofuel capacity utilization rates in both countries are very low. Malaysia's palm oil-biodiesel capacity has reached 2.5 million tons, and Indonesia has reached 4-5 million tons.
According to DorabMistry, manager of Godrej International, the key to the success of the Indonesian biodiesel project is subsidies and diesel and gasoline prices. Due to the huge inventory of Indonesian palm oil, the impact of the project on exports may be limited.
FitchRatings' report in the Department also pointed out that due to the low crude oil prices, Malaysian automakers resisted biodiesel and Indonesia's supply chain infrastructure was imperfect, resulting in lower than expected biodiesel usage in Malaysia and Indonesia.
Global crude oil prices have plummeted since mid-2014, causing palm oil prices to be twice as expensive as fossil fuel substitutes. World palm oil producers Indonesia and Malaysia may have to control palm oil-biodiesel consumption plans: Indonesia is expected to In 2016, the biofuel blending rate in gasoline increased by a quarter to 20%, while Malaysia had planned to increase the biofuel blending rate from 7% in 2015 to 10%.
MCRhandran, a senior palm oil analyst at a consultancy in Kuala Lumpur, said he believes Malaysia and Indonesia will have to re-examine biofuel blending policies as both countries are also oil producers and exporters. In the case of falling crude oil prices, it is not economical to implement a biofuel blending policy. At present, gasoline is only half the price of palm oil.
Analysts expect Indonesia to achieve at least 10% of its biofuel blending target in 2016, while Malaysia's blending rate may be lower than 7% in 2015. But the Indonesian government said it would achieve a 20% biofuel blending target. According to Rida Mulyana, head of the Renewable Energy Office of the Indonesian Ministry of Energy, the most important thing is that the government will implement a 20% biofuel blending target. The new biofuel blend target aims to consume up to 3.4 million tons of palm oil stocks in Indonesia. Malaysia's palm oil stocks are also up to one million tons. Biofuel capacity utilization rates in both countries are very low. Malaysia's palm oil-biodiesel capacity has reached 2.5 million tons, and Indonesia has reached 4-5 million tons.
According to DorabMistry, manager of Godrej International, the key to the success of the Indonesian biodiesel project is subsidies and diesel and gasoline prices. Due to the huge inventory of Indonesian palm oil, the impact of the project on exports may be limited.
FitchRatings' report in the Department also pointed out that due to the low crude oil prices, Malaysian automakers resisted biodiesel and Indonesia's supply chain infrastructure was imperfect, resulting in lower than expected biodiesel usage in Malaysia and Indonesia.
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