Advanced BioFuels USA

by Donavan Lim (S&P Global Platts) Indonesian PME exports to sink; CPO production stalls; B30 to support consumption  —  Analysts and traders fixated on the elevated crude palm oil stockpile at the beginning of 2019 are left cheering as CPO stocks fell across Malaysia and Indonesia while prices rallied to MR 2,684/mt (US $648/mt) December 4 against MR 2,065/mt at the beginning of the year.

…

A climb in domestic consumption helped pushed Indonesia CPO inventories lower. Domestic consumption climbed to 1.512 million mt in August 2019 versus 1.072 million mt in August 2018, driven primarily by the B20 blending mandate that kicked off in the latter part of 2018.

…

Going forward, palm exports, if prices stay at close to the soybean oil level, would see stiff competition from soybean oil, though stalling CPO production plus blending needs for palm oil methyl ester will ensure the CPO supply remains tight.

…

The Indonesian domestic biodiesel mandate expected to increase in January 2020, to B30 blends will result in Indonesian capacity been fully utilized all year as PME could be used in Indonesia year-round as the country does not have winter months.

Most producers had reported preparing for the upcoming B30 blending mandate and were expecting their capacity to be utilized up to 70% to 90% for the domestic mandate, and some were expecting less than 100,000 mt of exports in 2020.

The European Commission had imposed anti-subsidy measures of 8%-18% on biodiesel imports from Indonesia, which would see much of Indonesian PME exports shut out of Europe. With current PME versus gasoil prices, China is not expected to purchase much PME for discretionary blending, either, though the loss of external demand on PME is not expected to have much effect on CPO prices or PME production in Indonesia.

Sathia said: “9-10 million tons of CPO are expected to be utilized to produce 10.6 million kilo liters of biodiesel so that the targeted consumption of 9.60 million kilo liters can be achieved in 2020.”

A total of 9.6 million kiloliters quotas of the biodiesel mandate was awarded to 18 companies, including state-oil company PT Pertamina, Wilmar International, Musim Mas and PT Shell Indonesia.

In Malaysia, B20 blending mandate is expected to consume 1.7 million-2 million mt of CPO to produce 2.2 million kiloliters of PME. Malaysia would gain from Indonesia’s loss, with PME from the country entering Europe once the winter ends.

WASTE OIL

Besides PME, European buyers had also been offtaking waste oil, such as used cooking oil, to satisfy demand.

Current UCOME ((Used Cooking Oil Methyl Ester) prices at above $1,000/mt FOB China while UCO prices are at above $700/mt, which had prompted many UCO factories in China to consider a switch to production of UCOME.  READ MORE

Malaysia expects palm oil inventory to end year at 2.1mln tonnes – report (Zawya)