- Bloomberg reported that the European Union (EU) would be imposing tariffs on producers from Argentina and Indonesia for allegedly selling biodiesel in the EU below cost.

- The provisional duties against Argentina are expected to range from 65.24 Euros per tonne to 104.92 Euros per tonne. Depending on the company, the levies against Indonesia are envisaged to range from 24.99 Euros per tonne (RM98.21/tonne) to 83.84 Euros per tonne (RM329.49/tonne).

- One Indonesian exporter, Ciliandra Perkasa PT has zero duty rates. Ciliandra Perkasa is part of the Surya Dumai Group, which owns more than 900,000ha of forestry and timber plantations in Riau.

- EU governments must decide within six months whether to turn the provisional antidumping duties into “definitive” levies lasting for five years.

- We are neutral on this development. There is minimal impact on Malaysia as the country is not a major exporter of biodiesel. Malaysia exported 28,983 tonnes of biodiesel in 2012.

- In fact, Malaysian biodiesel producers could take advantage of the situation to export more to EU. Exports of biodiesel from Malaysia amounted to 39,708 tonnes in the first four months of the year.

- Indonesian biodiesel exporters have said that they might lodge a complaint with the World Trade Organisation on EU’s import duties.

- According to news reports, Indonesia exported 1.5mil tonnes of biodiesel in 2012, three times higher than the 500,000 tonnes of exports recorded in 2010. EU is a major biodiesel market for the Indonesian producers.

- Reflecting the imminent threat of the EU duties, biodiesel exports from Indonesia have declined this year. Indonesia exported less than 200,000 tonnes of biodiesel in the first four months of the year.

- We believe that biodiesel producers in Indonesia would have to switch towards the domestic market instead of exports.

- As of February 2012, PERTAMINA increased the blending rate for biodiesel in the country from 5% to 7.5%. Alternatively, Indonesian biodiesel players would have to look for other export markets such as USA.

Source: AmeSecurities