India’s newly launched biodiesel mandate would have limited impact on the region’s balances but could potentially help ease Malaysia’s crude palm oil surplus, market participants said Tuesday.
India began sales of B5 biodiesel blends this week at four retail outlets in New Delhi, Vishakhapatnam, Haldia and Vijayawada marketed by state-owned petroleum companies like Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum, according to local media reports.
Sales of the biofuel at the Haldia outlet started as early as June 24, serving mostly cranes and trucks operating within the port, the Times of India reported last week.
The move was largely based on a government initiative to reduce the country’s reliance on oil and gas imports and for environmental reasons.
Reactions in the region were mixed, with some market participants expressing surprise as India has limited production of palm oil and would need to import the raw material for producing biodiesel, defeating the original purpose of non-reliance on imports.
“India doesn’t have anything — they are a net importer of oils and have a food deficit so they will have to import the raw material when its economical versus the domestic feedstock,” said a trader.
In addition, palm oil is currently more attractive into the edible oils sector as opposed to biofuels prompting biodiesel manufacturers in India to look mainly at used cooking oil as a feedstock.
Other industry sources in the region felt the initial impact of the move would be muted as it remains unclear if the program would be nationwide, and as there are a fair bit of crude palm oil stocks in Southeast Asia.
“India can mop up the surplus in the region, but we don’t know the actual consumption figures from there too, and there have been no enquiries for imports as yet,” said a Malaysian producer.
As of July, Malaysia’s CPO stocks totaled 1,255,272 mt, an increase of 14% from June, while production volumes rose 2.9% to 1,815,631 mt, according to statistics from the Malaysian Palm Oil Board.
Source:hellenicshippingnews.com
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