Singapore — Malaysia's biodiesel exports surged twelvefold year on year to 46,601 mt in July, the highest level since the Malaysian Palm Oil Board began reporting statistics in January 2008, bolstered by an open arbitrage to Europe.
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The July total was up from 3,610 mt in July 2014 and also up 105.56% from 22,670 mt in June, the board's data released Tuesday showed.
The total value of the July exports was reported to be RM127.47 million ($31.6 million).
An arbitrage window between Asia and the EU swung open at the end of May. It has been narrowing in August due to lower spot RED PME prices in Europe in the leadup to the switch to winter-spec biodiesel.
Nevertheless, it remains very much open on paper. Spot RED PME prices in Europe were assessed at $862.75/mt FOB ARA Tuesday.
This would net back to around $689.84/mt FOB Southeast Asia, taking into account a daily backwardation of $0.45/mt, freight rates of around $80/mt, a $20/mt premium for RED-spec and a 6.5% import duty into Europe.
Arbitrage cargoes would still potentially yield profits of around $44.84/mt.
The average spot PME price in July was $663.45/mt FOB Southeast Asia, down 3.7% from $689/mt in June.
With the Malaysian ringgit at a 17-year low of 3.9575 against the greenback, the country's exports could continue to attract European buyers.
Malaysia's biodiesel exports have fluctuated wildly in 2015, dropping to 186 mt in April before picking up again in subsequent months.