An excess supply of biodiesel is causing concern for domestic producers, as competition stiffens with more factories producing it.
Two new listed companies are entering the biodiesel production market, pushing daily output to approximately 8.5 million litres.
The commonly used biodiesel B100 reportedly has 13 factories producing 6.6 to 7 million litres a day, but national demand is around 3.3 to 3.5 million litres per day, said Sanin Triyanont, president of Thai Biodiesel Producers Association.
According to the association, the new B100 factories are owned by Global Green Chemicals Plc and PTG Energy, which will be producing and using their own supply. It was also reported the country will see an on-going trend of traditional buyers of biodiesel beginning to produce their own, which will leave the traditional suppliers fighting over the remaining areas of the market share.
The current over-supply of biodiesel has already affected the profitability of domestic producers, with most factories at less than 50% of capacity and cutting prices to below 20 baht per litre.
This has caused production cost problems for Thailand. Malaysian producers use up to 80% of their capacity, which allows the industry to remain economically feasible. Furthermore, the Malaysian government recently announced they will mix 7% of B100 into ordinary diesel and make biodiesel B7 readily available year-round in 2018.
This move will subsidise Malaysia’s palm oil industry and strengthen its economy, rather than relying on the export of crude palm oil (CPO).
A member of the palm oil agriculture industry in Krabi province, Chayakom Suvanwattana, said the Ministry of Commerce has told palm oil harvesters the deputy permanent secretary will be surveying them and potentially drafting new policies, as prices for CPO remain alarmingly low at 2.5 to 3.5 baht per kilogramme.
