China looks to raise demand for Malaysian palm oil, imported biodiesel

China is likely to sharply increase its imports of palm oil from Malaysia, a move that could soften the blow for producers of a proposed exclusion of the crop for use towards the EU’s renewable energy scheme from 2021-2030.

Based on the weekly reports from China’s National Grain and Oil Information Centre, the Malaysian government abolished tariffs for exports of palm oil starting from 8 January and will extend the tariff holiday until early April this year.

The move is part of an attempt to stimulate more imports of palm oil into China and India and provide a lift to flagging prices.

China has long been a major consumer of palm oil for use in processed food and cosmetics, but is also increasing imports so it can scale up its domestic biofuels industry and decrease the share of imported biodiesel.

China’s Ambassador to Malaysia Bai Tian was reported as saying that China was a “golden opportunity” for the southeast Asian country’s palm oil biofuels industry, adding that “we will not set any limit on the import of Malaysian palm oil and related products”.

Bai Tian said the country’s diesel and biodiesel B5 consumption in 2016 was about 165 million tonnes and 8.25 million tonnes, respectively, while its biodiesel production in 2015 was 300,000 tonnes.

“This means, we need to import eight million tonnes of biodiesel. I think this is a good news for palm diesel producers,” the ambassador added.