Indonesia’s biofuel B40 plan expansion at risk on high palm oil prices

Indonesia’s plan to implement a 40% biodiesel blending (B40) mandate is likely to face further delays due to high palm oil...

Indonesia’s plan to implement a 40% biodiesel blending (B40) mandate is likely to face further delays due to high palm oil prices, a government official told newswire Reuters, in a move that reinforces existing fears that the biodiesel expansion plan is unclear.

Indonesia currently has a B30 (30% biodiesel blending) mandate, introduced in January 2020, but it struggled to implement it last year as a drop in fossil fuel prices, due to the Covid-19 pandemic, led to unfavourable blending economics.

The implementation of the B40 biodiesel mandate was originally targeted for July 2021.

While some companies, such as Indonesia’s PT Pertamina, have stated that they are ready for the B40 mandate implementation, there are issues regarding the production costs of producing the biodiesel.

“The price of CPO [crude palm oil] for biodiesel production should not necessarily follow global prices as it is produced in Indonesia and used for the production of biodiesel” Pertamina’s President Director Nicke Widyawati said in an Investor Summit in July.

The Indonesian Palm Oil Association (Gapki) also said earlier this year that the B40 implementations is likely to be delayed beyond 2022.

Palm oil holds firm

Palm oil futures on the Bursa Malaysia have remained at high levels this year on the back of bullish vegoil prices and a strong energy market.

In Malaysia, the front month palm oil contract reached MYR4,364/mt ($1,039/mt) on August 25, up 13% from the start of the year.

Strong demand from key buyers – China and India – have continued to keep prices supported this year, while output concerns in Malaysia due to low yields and labour shortages at palm oil plantations have also supported the futures contract.

What to read next
Fastmarkets has decided not to proceed with the proposed amendment to the name and specifications of the MB-IRO-0008 iron ore 62% Fe fines cfr Qingdao index. After a consultation period, Fastmarkets has determined that current circumstances do not make the proposed amendments to the index viable. Fastmarkets reserves the right to start a fresh consultation on […]
The following prices were affected: MB-FEN-0001 Nickel pig iron, high-grade NPI content 10-15%, contract, ddp China, yuan/nickel unit priceMB-FEN-0002 Nickel pig iron, high-grade NPI content 10-15%, spot, ddp China, yuan/nickel unit priceMB-NIO-0001 Nickel ore with 1.8% nickel content, cif China, $/tonneMB-NIO-0002 Laterite ore with 1.5% Ni content, cif China, $/tonneMB-NIO-0006 Laterite ore with 1.3% Ni content, cif China, $/tonne MB-FEN-0001 and […]
Fastmarkets has launched MB-NI-0257, high-grade nickel matte payable indicator, 65-75% nickel contained, cif China, % of official exchange price on Friday May 30.
After a one-month consultation period, Fastmarkets has amended the frequency of its price assessments for MB-MAG-0005 Magnesia, dead burned, 97.5% MgO, lump, fob China, MB-MAG-0002 Magnesia, dead burned, 90% MgO, lump, fob China, MB-MAG-0009 Magnesia, fused, 97% MgO, Ca:Si 2:1, lump, fob China, and MB-MAG-0007 Magnesia, fused, 98% MgO, lump, fob China, to monthly from […]
The publication of Fastmarkets’ molybdenum drummed molybdic oxide – in-whs Busan, MB-FEO-0004, and in-whs Rotterdam, MB-FEO-0003 – and ferro-molybdenum 65% Mo min, in-whs Rotterdam, MB-FEO-0001, price assessments were delayed because of slow data processing on Friday May 23. Fastmarkets’ pricing database has been updated. The publication of these prices was delayed for 12 minutes. The […]
Brazil could reach a share of as much as 7 million tonnes per year in China's distillers dried grains (DDG) and distillers dried grains with soluble (DDGS) markets following an agreement between the two countries that allows Brazilian exports, according to the National Union of Corn Ethanol (Unem).