Indonesia doubles down on waste oil export rules

Market: Agriculture, Biofuels
09/02/22

Indonesia will expand export restrictions to a wider range of palm-based products including common biodiesel and hydrotreated vegetable oil (HVO) feedstocks from 15 February.

Palm oil mill effluent (Pome) under HS code 1522.00.90 and palm fatty acid distillate (Pfad) under 3823.19.20 are among products that will require permits to export, according to an extended list released on 8 February by the country's trade ministry. But Pome cargoes under code 1522.00.99, frequently used for imports to Europe, remain exempt.

The broadened list deals a blow to exporters of non-edible oils such as used cooking oil (UCO), who had hoped the ministry would discount waste oils from the policy after representatives from a newly formed UCO exporters association met the trade ministry to argue their case on 3 February.

"Probably the government suspected some people try to smuggle", one waste oil exporter gave as a possible reason for the widened crackdown.

Exporters of restricted products must prove they have retailed CPO and palm olein within Indonesia equalling 20pc of planned export volumes before they can obtain licences to sell overseas.

UCO exporters have been scrambling to secure local sales partners and supply lines to meet the domestic marketing obligation in recent days while awaiting response from the ministry. They argue they do not ordinarily have access to edible oils, though some participants say concerns about edible oil mixing in the waste oil pool have prompted Jakarta to include UCO and Pome in the curbs.

CPO, palm olein and UCO exports were restricted in the first round of curbs from 24 January, which aimed to tame domestic cooking oil prices. Code 2306.90, which some market participants use to export Pome, was also included in the initial list though this applies to residues with free fatty acid content below 20pc, while unrefined Pome usually carries minimum 50pc.

Global palm oil markets saw sharp gains and volatility since the new rules slashed Indonesian palm exports from 24 January. Domestic Indonesian CPO prices have diverged from global markets and dropped by over $34/t during the same period.

By Lauren Moffitt

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