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Indonesia has yet to implement its higher mandatory biodiesel blending rate, which was due to take effect on 1 January, as industry players await technical details of the new regulation, leaving palm oil traders unsettled.
The government had pledged to raise the palm oil-based biodiesel blend to 40%, known as B40, from 1 January, up from the current 35% blending rate.
The benchmark palm oil contract for March delivery on Bursa Malaysia Derivatives closed down 2.5% at 4,336 ringgit ($968.72) per tonne on Thursday amid uncertainty over the B40 rollout, after having risen about 1.8% earlier in the session, tracking gains in vegetable oils on the Dalian exchange.
The plan to raise the biodiesel blending rate in Indonesia, the world's largest palm oil producer, helped drive Malaysia's benchmark palm oil contracts up nearly 20% in 2024, on expectations of reduced palm oil exports from rival Indonesia.
By Thursday, Indonesia's state-owned energy company Pertamina, which operates the country's largest network of fuel stations, and the biodiesel producers' association Aprobi, said they were awaiting the relevant official decrees before beginning to sell the fuel.
Source: Reuters