KUALA LUMPUR: Indonesian biodiesel makers are gearing up to boost exports after the European Union removed anti-dumping duties on shipments from some producers in the country, but rival suppliers in Malaysia are bracing for a slowdown in the wake of the move.
After legal proceedings at the European Court of Justice, the EU last month removed duties on biodiesel imports for 13 Indonesian and Argentine producers that had been in place since 2013.
The move is set to be a boon for Indonesia, the world’s top supplier of palmoil-based biofuel, but is expected to hit Malaysian exporters hard as they lose market share due to higher costs in their smaller-scale biodiesel industry.
Traders estimate Malaysian prices for a tonne of biodiesel are typically US$30 (about RM117) to US$40 more expensive than Indonesian cargoes. Both nations use palm oil from their vast plantations to churn out biodiesel.
That would still be way off the 1.4 million tonnes exported the year before the EU duties were introduced, although a Malaysian-based biodiesel trader said Indonesia could ship up to 80,000 tonnes a month from here on in. He declined to be identified as he was not authorised to speak with the media.
Weaker export demand for Malaysian biodiesel is expected to curb utilisation rates at the country’s production plants.
“Malaysia biodiesel exports last year were pretty good… It had a window to export to the EU, but now Malaysia is not competitive,” said U R Unnithan, president of the Malaysia Biodiesel Association (MBA).
“I imagine Malaysian biodiesel exports (to the EU) now would be virtually nothing.”
Malaysia’s biodiesel exports largely EU bound jumped to 235,000 tonnes in 2017 from 83,000 tonnes the previous year, according to MBA data.
