|
MUMBAI - Biodiesel is the new buzzword lighting up the palm oil industry. |
|
|
|
|
Written by Cameron Little
|
|
Saturday, 01 October 2005 |
from Planet Ark and Reuters News Agency ...
ANALYSIS - The Veggie Fuel
Tank Ignites Palm
Outlook
----------------------------------------------------------------------------
----
MUMBAI:
September 30, 2005
MUMBAI - Biodiesel is the new buzzword lighting up
the palm oil industry.
With crude oil prices soaring, Asian palm oil
and South American soyoil
producers see huge opportunities as countries seek
vegetable oils to produce
environmentally friendly biofuels.
Analysts
believe biodiesel usage has the potential to become the biggest
component of
growth in vegetable oils. It has already lifted once-depressed
prices and
forecasts point to a five to 10 percent increase for most oils in
the new
year.
"All over the world there is a switchover to vegetable oil for
biodiesel,
even for straight burning," Dorab Mistry, industry analyst and
director of
Godrej International Ltd, told Reuters.
A colleague of
Mistry made the point in lighter vein at a conference in
Kuala
Lumpur.
"I will not hazard any range, for very soon I will have to
change," Nadir
Godrej, managing director of Godrej Industries Ltd, said
referring to price
forecasts for palm oil.
"Please do not think that I
am a weasel. Just pray and say biodiesel,"
Malaysian news agency Bernama
quoted him as telling the conference.
European governments are trying to
promote the use of biofuel, notably
biodiesel derived from vegetable oils and
ethanol that can be produced from
grains, sugar or biomass, to cut greenhouse
gas emissions from fossil fuels.
"The total biodiesel capacity coming on
stream in the United States alone by
the end of October 2007 will require 1.6
million tonnes of soya oil," said
Mistry.
Mistry told a weekend
conference that rising biodiesel usage will mean
demand for edible oils will
outstrip production by at least 6 million tonnes
a year.
Biodiesel
output by 15 EU members rose to an estimated 1.85 million tonnes
last year
from 1.45 million in 2003 and 1.05 million tonnes in 2002,
industry
associations say.
To sell their oils, Malaysia and Indonesia have for
decades looked at India,
until recently the world's largest edible oil
importer. But now the
countries, which also must battle with South American
soybean oil producers,
are increasingly looking to the European
Union.
Palm oil is one of the world's cheapest vegetable oils and the EU
imports
about 3.5 million tonnes of refined and crude palm oil every year,
mainly
Malaysia and Indonesia.
But the EU's total edible oil imports
-- which includes soy oils -- are
expected to jump 8 percent next year to 8.4
million tonnes, as estimated by
Oil World.
Analysts believe palm oil
producers could be the big winner since it is the
cheapest of the oils and
easiest to work with when transforming into fuels.
Malaysian officials
said the combustion grade of palm diesel from the
country will be on par with
winter-grade methylester produced from rapeseed,
the top source of biofuel in
Europe.
"But what makes the potential even greater is that palm oil is at
least $200
a tonne cheaper than rapeseed oil," said Yusof Basiron, head of
the
government-run Malaysian Palm Oil Board.
Listed Malaysian
plantation companies that could benefit from higher sales
of palm oil include
IOI Corp Bhd , Kuala Lumpur Kepong Bhd and Golden Hope
Plantations Bhd
.
IOI and privately-held Kuok Oil & Grains, another Malaysian firm,
have
already started building refineries in Europe to process the additional
palm
oil expected to land in that market.
Western environmental groups
have criticized the expansion of palm
plantations, which they say drive out
animals and jeopardize biodiversity of
the jungle. Malaysia denies the
charge, saying its entire palm industry is
nature-friendly.
"Today,
the same West requires palm oil to produce biodiesel, so
environmental issues
are taking a back seat," P.R. Thakore, a vice president
with Pan-Century
Edible Oils Sdn. Bhd. said.
Europe is short of diesel as it has
underinvested in refinery production in
recent decades while motorists are
increasingly switching to the fuel
instead of gasoline. The EU has set a
non-binding target of 5.75 percent
biofuel content by 2010.
Industry
officials say biodiesel usage would also grow in countries such as
Brazil,
Argentina and Indonesia, which are all net vegetable oil exporters
but crude
oil importers.
Derom Bangun, chairman of the Indonesian Palmoil Producers
Association, said
Indonesia will soon move from the experimental stage in
biodiesel to full
fledged manufacturing.
"Many investors are seriously
considering to set up biodiesel manufacturing
plants in Indonesia...this is
an indication of the trend for new demand for
palm oil," Bangun
said.
(Additional reporting by Barani Krishnan in KUALA
LUMPUR)
Story by Hari Ramachandran
REUTERS NEWS
SERVICE
|
|
Last Updated ( Saturday, 01 October 2005 )
|
Home 
News 
