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Biodiesel unlikely to re-emerge as CPO price driver

Since the sharp fall in crude oil prices at end-2014, palm oil has traded well over gas-oil prices (a positive palm oil-gas oil [Pogo] spread), leading to a significant drop in discretionary demand for biodiesel. As noted by Petronas Chemicals Group Bhd head of marketing Eric Ho, the key decision for oil and gas companies on biodiesel production is the potential value contribution, as methanol products have multiple uses, including industrial, petrochemical and fuel usage. We gather that without a strong value contribution, producers may well reduce their production allocation for biodiesel. On the demand side, MBA deputy president Long Tian Ching and Indonesian Association of Biofuel Producers (Aprobi) vice chairman Paulus Tjakrawan noted that export demand for biodiesel, especially from Europe, had dropped with the higher crude Pogo spread since 2014, leading to increased importance of domestic demand. (THE EDGE MARKETS.COM)