-  Reuters reported that European Union (EU) members have agreed to impose punitive duties on biodiesel imported from Argentina and Indonesia.

-  The European Commission has proposed duties between 217 and 246 Euros (RM941 to RM1,067) per tonne on biodiesel imports from Argentina and 122 to 179 Euros (RM529 to RM776) per tonne on imports from Indonesia.

-  The duties should be in place by end-November 2013 after further procedural steps. Sources said that Argentina is preparing to take EU to the World Trade Organisation to challenge the duties.

-  According to news reports, Indonesia exported about 1.5mil tonnes of biodiesel in 2012 compared with 500,000 tonnes in 2010. EU is estimated to account for 88% of Indonesia’s biodiesel sales.

-  The negative impact from EU’s imposition of the duties would be partly mitigated by the implementation of the B10 biodiesel policy in Indonesia.

-  Recall that B10 was imposed on industrial users in Indonesia in September 2013. B20 for power plants is supposed to take effect from January 2014.

-  We think that Malaysia could be a beneficiary of Indonesia’s biodiesel woes. Biodiesel exports from Malaysia could pick up again after weakening in August and September.

-  Biodiesel exports from Malaysia rose by 506% YoY to 122,779 tonnes in the nine months of the year.

-  Biodiesel producers in Malaysia include Sime Darby and Felda Global, which recently acquired Mission NewEnergy’s 100,000 tonnes per year biodiesel plant in Kuantan.

-  We have a NEUTRAL stance on the plantation sector currently. Our stock pick in the sector is Genting Plantations.

Source: AmeSecurities