Malaysian palm oil biodiesel producer makes high-grade Vitamin E as a by-product, stays at full capacity as competitors grind to a halt

In Malaysia, Carotech Berhad continues to produce palm oil biodiesel at full capacity owing to its focus on co-generating Vitamin E. Carotech executives told Reuters that the company’s 50 percent blend of palm-based Vitamin E is selling for $600 per kilogram and is extracted from the same batch of palm oil from which they create a tonne of biodiesel worth $1100 at current prices. With crude palm oil reaching $1100 per tonne, biodiesel-only producers are struggling to keep their plants open, and those who have been relying on extra income from the glycerine byproduct from biodiesel production have seen a collapse in the cost of that commodity as well.

86 of 91 approved Malaysian biofuels plants have been stalled by high CPO prices and low margins, and the
government said it would begin to revoke biodiesel plant permits. The government believes that producers had not taken the permitting process seriously, while producers believe palm oil prices have to climb down to $780 per metric ton before plants are feasible.

As recently as December 18th, the Malsysian government said that “We are happy that crude palm oil is fetching high prices“. Second Finance Minister Nor Mohamed Yakcop said at that time he believed that current CPO (crude palm oil) prices were not ” excessively high” and said that higher prices equated to higher revenues for Malaysia.
But in a shock development, the central government released emergency stocks of palm oil last week and ordered producers to step up output by 30 percent after a wave of panic buying prompted by shortages and price increases. The world’s largest producer of palm oil has introduced rationing after experiencing a spike in demand associated with Chinese New Year. The price of palm oil, a key biofuel feedstock, rose to $1098 per tonne.

Singapore has announced plans to triple biodiesel production at Jurong Island by 2015, citing the proximity to Malaysian palm oil producers. At the same time, Indonesia, Thailand and the Philippines have announced that they plan to increase palm oil production cultivation to 5 million acres.

Indonesia and Malaysia produce 85% of the world’s palm oil, and are expected to increase production to 35.2 million metric tons in 2008, versus 32.4 million tons in 2007. India produced 16 million metric tons of oil from seeds, primarily from peanuts and soybean.

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