Malaysia’s 2021 biodiesel output, exports to fall: USDA

Record-high crude palm oil (CPO) prices are likely to cut Malaysian biodiesel output and exports by 16pc and 23.5pc respectively in 2021, the US Department of Agriculture (USDA) said.

The USDA Malaysian Foreign Agricultural Service forecasts the country will produce just 1.05bn l of biodiesel this year, while exports will drop to 315mn l.

CPO prices have been well above historical averages throughout this year. This has kept the palm oil-gasoil spread wide, wiping out demand from discretionary blending in China while making it more attractive to export CPO than blend it domestically for biodiesel.

Only 966,000t of CPO will be used as feedstock for biodiesel production in 2021, according to the USDA, down by 16pc from 2020 and the lowest level since 2017.

Tepid biodiesel demand will send capacity utilisation for domestic biorefineries down to just 43pc of their 2.5bn l/yr total capacity in 2021, the USDA said, in what would also be the lowest recorded rate since 2017.

Malaysian domestic on-road biodiesel consumption will rise by 8pc to 720mn l in 2021, in line with an 8pc recovery in the on-road diesel pool to 7.17bn l after movement control policies were relaxed this year. But continuing restrictions on interstate travel will keep on-road diesel consumption short of pre-pandemic levels of almost 7.45bn l in 2019.

Kuala Lumpur’s decision to push back its nationwide B20 rollout because of the higher costs of subsidising the programme will further limit gains in domestic biodiesel demand.

Argus Media

Tags: Malaysia, biodiesel, output, exports, USDA, prices, Crude palm oil