Biodiesel is pumped into a car at the Sime Darby Biodiesel Plant in Carey Island, outside Kuala Lumpur, Malaysia March 24, 2010. (Reuters Photo/Bazuki Muhammad)

Malaysia's Biodiesel Output, Exports Set to Hit Records: Industry Body


OCTOBER 21, 2018

Kuala Lumpur. Malaysian biodiesel production is likely to hit record levels this year and next, with 2018 exports on track to double from 2017, pushed up as higher oil prices boost the appeal of biofuels, the head of an industry association said on Wednesday.

The Southeast Asian nation is the world's number two producer of palm oil, which can be used as feedstock to make the bio components of biodiesel.

"I believe Malaysian [biodiesel] production might hit 900,000 tons and exports 475,000 tons if the current price differential between crude palm oil and gasoil remains," U.R. Unnithan, president of the Malaysian Biodiesel Association, told Reuters by text message.

"These would be record high [output and export] levels for Malaysia," he said.

Malaysia churned out 720,410 metric tons of biodiesel in 2017 and exported 235,291 tons, according to local data.

The country said in July that it would raise its so-called biodiesel mandate next year to 10 percent from the current 7 percent. The mandate refers to the percentage of bio-content that must be contained in biodiesel.

If the government goes through with that plan and crude prices hold, Malaysia could produce up to 1.2 million tons of biodiesel in 2019, 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 $219 per ton in early October, its widest in four years, and was around $178 on Wednesday.

Unnithan's latest outlook marks an upward revision to estimates he made in April, when he said Malaysian biodiesel production could decline to 500,000 tons in the face of competitive shipments from Indonesia. Diesel's spread over palm was about $20 a ton at that time.