news/updates
High coconut oil prices stunt coco-based biodiesel exports
By Maria Kristina C. Conti
BusinessWorld
October 10, 2007
HIGH COCONUT oil prices are undercutting the country's coco biodiesel exports, with two heavy producers of coco biodiesel, or fuel-grade coco-methyl ester (CME) saying they have exported none this year.
Prices of coconut oil, the fuel's raw material, have stayed at uncompetitive levels since last year, due to the lingering effects of strong typhoons that struck in the fourth quarter of last year.
Crude coconut oil now sells for P45 per kilogram to P46/kg, up by at least 30% from 2005 levels.
The Philippine Coconut Authority (PCA) said coconut production could slow down by 12% to a projected 2.17 million metric tons (MMT) this year from 2.47 MMT in 2006. "The typhoons 'Milenyo', 'Reming' and others last year reduced production by about 300,000 million tons," said PCA deputy administrator Carlos B. Carpio in an interview yesterday.
Due to typhoons in 2005, production also fell by 6.7% in 2006 from 2.65 MMT.
Foregoing opportunities
With steep costs, Chemrez Technologies, Inc. decided to forego export opportunities this year, said finance officer Francis A. Caluag. Chemrez has the largest coco biodiesel production capacity registered with the Energy department.
"The last exports we sent to Europe [Germany] was in September [last year]. But now, because of the higher costs, we instead shipped out industrial-grade [not fuel-grade] CME to Japan instead," he said, explaining that Chemrez' CME ends up in Japanese soaps.
Senbel Fine Chemicals Co., Inc. also used to export to Germany, Holland, England and Australia test volumes of CME, but changes in the export market are running against the company this year.
Cheaper alternatives
Senbel technical expert Serafin V. Cena said that, based on the price comparison of coconut oil versus other vegetable oils, coconut oil has become more expensive. Yesterday, the export price of coconut oil for shipment to Rotterdam stood at $960 per metric ton; palm oil, $845/MT; and soybean oil, $837.31/MT.
Rapeseed oil, Europe's main alternative to coconut oil for biodiesel production, costs only around $800 per metric ton to $850/MT. At present, it seems it is cheaper for foreign companies to process rapeseed oil themselves than import ready biodiesel, said Mr. Cena.
Both Senbel and Chemrez declined to give figures for the value and the volume of their exports.
Local demand growing
"The implementation of the Biofuels Act has boosted local demand, so that is where we have grown," said Mr. Caluag.
But the Philippines is more than ready to export its excess biodiesel production, as current supply tops local demand more than three times over, emphasized Mr. Carpio.
...But still not enough
Six accredited biodiesel companies in the country have a total capacity of 252.9 million liters production annually, but current demand is only at 78 million liters.
Even the Biofuels Act of 2006 provides the impetus to increase biodiesel blend from the current 1% to 2% in 2009, the demand of 168 million liters by that year will only be a fraction of projected output capacity, said Mr. Carpio.
CME producer Bioenergy Northern Luzon has asked officials to broker talks with the Japanese government for export opportunities, he said.
Japan mandated 5% biodiesel blends last March. With that blend percentage, Japan requires 390 million liters of biodiesel in a year. A Japanese survey, however, puts total diesel requirement, for transport and other sectors, at 40 billion liters a year.
The Japanese consultant Toyo Engineering Corp. has recommended that Bioenergy cultivate 200,000 hectares of coconut plantations which can produce about 300 million tons of biodiesel. Under Toyo Engineering's plan, the entire output of the CME plant will be shipped to Japan to supply that country's growing demand for biofuels. The project, which may require up to P200 million, will be funded by the Japan Bank for International Cooperation.
