Kuala Lumpur, Malaysian (CU)_ The Malaysian Biodiesel Association (MBA) announced on Tuesday that due to the limitations imposed by European Union and the impacts of coronavirus pandemic, this year’s palm-based biodiesel exports are expected to plummet to their lowest level since 2017. According to MBA president U.R. Unnithan, who spoke at the Virtual Palm and Lauric Oils Price Outlook Conference, Malaysian exports are expected to drop to 350,000 tons as against 378,582 tons in 2020.
Around 80% of Malaysia and Indonesia’s exports of palm methyl ester (PME), a byproduct of biodiesel made from palm oil, go to the European Union. Exports, on the other hand, have slowed after the union decided in 2019 to limit the use of palm oil for transportation fuel due to issues about deforestation, with the goal of cutting its use by 2030. Unnithan said, “(Malaysia’s) biodiesel exports are unlikely to best the performance seen in 2019 due to the EU Delegated RED II Act”.
The MBA reports that the EU consumed 6.2 million tons of palm biofuel in 2019. According to the study, actual exports will begin at far lower levels this year since EU member states that driving towards a palm-biofuel-free agenda can fix a lower cap. According to Unnithan, several member states are planning to cut down palm biodiesel by 2030 deadline. He stated that because of the new EU law, a rising crude palm oil-gas oil spread, and limited vehicle use due to coronavirus restrictions, this year’s palm oil exports will be the lowest in four years.
Palm oil prices have recently risen in tandem with lower crude oil prices, pushing the edible oil to $455 above gas oil on Tuesday, which makes it a less appealing biodiesel feedstock alternative. Crude prices have fallen on fears that new pandemic restrictions and slow vaccine deployment in Europe would stall a rebound in fuel demand, which plummeted last year due to pandemic COVID-19 lockdowns. Thus far, Malaysia’s benchmark crude palm oil prices have averaged 3,638 ringgit ($883.01) per tons this year, which is up 34% from an average price of 2,700 ringgit in 2020.
