Malaysia is turning into a net importer of used cooking oil (UCO) rather than net exporter, on supply reductions and rising domestic demand.
January exports increased by 34pc year-on-year to 30,000t but remained dwarfed by 37,000t of imports that rose by 4pc from a year earlier, according to customs data from Global Trade Tracker.
Singapore took more than half of Malaysia's exports with 16,000t followed by the Netherlands with 8,000t and Italy with 3,500t. Indonesia and China were the main points of origin providing 14,000t and 8,000t, respectively.
Incoming volumes have outweighed outgoing volumes in eight of last 13 months going back to January last year. Net exports were just 26,000t in 2020 compared with 113,000t in 2019. Singapore and the Netherlands were the biggest buyers last year taking 163,000t and 137,000t, respectively. China was the biggest provider supplying 231,000t followed by Indonesia with 83,000t.
A multitude of factors has contributed to the trend, not least increasing domestic UCO methyl ester biodiesel capacity from producers such as Vance, Mewah and FatHopes Energy keeping greater volumes of the feedstock within the country's borders.
Malaysian UCO collections have also been slashed by up to 50pc because of Covid-19 lockdown measures burning restaurant business while similar restrictions in the main European market have capped export demand.
Container shortages also quadrupled flexitank freight rates to Amsterdam-Rotterdam-Antwerp to more than $200/t at the end of last year closing the arbitrage for UCO along this route.
Several traders have set up bulking capabilities at major ports such as Port Klang and Pasir Gudang over the last couple of years as a hub to import smaller parcels from the region before exporting in larger shipments to Europe.
Some of these factors may subside moving into the second half of the year. Domestic supply should increase once movement restrictions are lifted and restaurant collections can resume in full, while freight rates are expected to ease over the next few months, which should loosen outgoings.
But the extent to which the current trend can be reversed remains to be seen with more companies looking to pivot towards UCO or other waste-based biodiesel or renewable diesel production because of the greater greenhouse gas savings and subsequent demand.
The main market of Europe is moving away from palm oil, the traditional biodiesel feedstock used by southeast Asian producers, because of sustainability concerns and will phase out the raw material from transport fuel by 2030.
Malaysian biodiesel exports dropped by 77pc to 11,000t from nearly 50,000t in December and last January as record high feedstock palm prices crimped discretionary blending.
Imports totalled nearly 18,000t in January from 16,500t a year earlier and 11,000t in December. Singapore supplied 15,000t and China 2,600t.
| Malaysia biodiesel, feedstock imports, exports | (t) | |||||||
| Jan '21 | Dec '20 | % ± m-o-m | Jan '20 | % ± y-o-y | Jan-Dec '20 | Jan-Dec '19 | % ± y-o-y | |
| Exports | ||||||||
| Biodiesel | 11,227 | 49,677 | -77 | 48,278 | -77 | 401,651 | 729,151 | -45 |
| UCO | 30,114 | 29,598 | 2 | 22,454 | 34 | 455,377 | 321,083 | 42 |
| Imports | ||||||||
| Biodiesel | 17,744 | 11,050 | 61 | 16,459 | 8 | 173,772 | 213,547 | -19 |
| UCO | 37,143 | 40,635 | -9 | 35,561 | 4 | 429,296 | 208,323 | 106 |
| Source: GTT | ||||||||
