(Kuala Lumpur, 21st) Despite the recent increase in palm oil prices to 5,000 ringgit per ton, analysts believe that if the international oil price continues to move opposite to it, it will affect Indonesia's biodiesel plan, and the upward trend in palm oil prices will also be difficult to sustain.
Research from a Malaysian bank's investment bank pointed out that although Indonesia plans to increase the biodiesel blending ratio from B35 to B40 in January 2025, the high palm oil prices combined with low crude oil prices will lead to a significant increase in subsidy pressures.
According to official data, the price difference between palm oil and diesel (POGO) in November is approximately 6,000 Indonesian rupiahs per liter, equivalent to 446 US dollars per ton (about 1,990 ringgit).
In other words, based on the estimated consumption of 16 million kiloliters of B40 biodiesel, the subsidy requirements in 2025 will reach 95.8 trillion Indonesian rupiahs (approximately 27 billion ringgit).
Analysts point out that this may lead to the palm oil fund that funds the country's biodiesel plan running out by the end of the first quarter of 2025, and the country will reduce its export taxes starting in September, further reducing income.
If crude oil prices do not rise significantly, it will be difficult to maintain the current palm oil price of 5000 ringgit per ton. It is estimated that under market pressure, the price may drop to around 4000 ringgit per ton early next year. The Indonesian government will also be forced to raise export taxes.
Indonesian government caught in a dilemma
To ensure the success of the B40 biodiesel policy, there needs to be a significant retreat in palm oil prices, and crude oil prices per barrel need to increase by more than 50...