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Friday, 5 August 2011

Threat to Malaysian palm sector

Malaysian palm oil downstream players in the refining, oleochemicals and biodiesel sectors will likely see their operations rendered as uncompetitive with stagnating profit margins following Indonesia’s latest proposal to restructure its palm oil export duty on refined palm-oil products.

The proposed duty structure will be 10 basis point lower, based on the average crude palm oil (CPO) spot prices at the Rotterdam market.

An industry source told StarBiz: “Even without the latest proposal, the existing Indonesian palm oil export duty structure has become an increasing threat to Malaysia’s 6 billion ringgit (US$ 2 billion) palm oil downstream industry.”

This has prompted the Palm Oil Refiners Association of Malaysia (PORAM), Malaysian Oleochemical Manufacturers Group (MOMG) and Malaysian Biodiesel Association (MBA) to urge the government to quickly come up with an appropriate solution to settle the issue within the next one month.

The associations claim that the CPO price to refiners (from March 9 to March 15) for Malaysia is about US$1,154 per tonne (without duty) while in Indonesia, the discounted CPO price less duty was about US$839.75 per tonne.



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