TM

MALAYSIAN PALM OIL COUNCIL

KDN NO : KKDN PP14669/5/2007

VOL: 4

2006

Russian Edible Oil Market Gains Momentum

Russia was part of the centrally
planned economy of the Soviet Union
until December 1991 when the Soviet
Union was divided into 15 independent
republics. Russia went into a financial
crisis on Aug 19, 1998 which subsequently resulted in the collapse of its
banking system. The Russian currency, the rouble, also took a tumble.
Today, Russias economy is finally
showing a growth trend. With strong oil
prices, the nation is now showing positive economic growth, its currency has
stabilised, while its banks are working
on some reforms.
Russia is a large market of 145 million
people and despite its problems, the
import market is expected to be on the
upswing, after showing signs of recovery. Once a major importer of palm oil,
Russia is now engaged in a remarkable
transition process, rebuilding many
industries that require raw materials for
processing, such as the margarine in-

Marketing and Market Development Division

Director
Wira Adam

wira@mpoc.org.my

Manager
Sum Kum Mooi

sum@mpoc.org.my

Regional Manager (Asia Pacific)

Kamal Azmi

kazmi@mpoc.org.my

Market Analysts:
Asia Pacific
Desmond Ng
South Asia
Fatimah Zaharah

desmond@mpoc.org.my
fatimah@mpoc.org.my

Middle East
Islah Ishak
islah@mpoc.org.my
Africa
Lim Teck Chaii
Europe
Sum Kum Mooi

lim@mpoc.org.my
sum@mpoc.org.my

Americas
Pang Poh Ling
pohling@mpoc.org.my
* For more information please contact :
Tel: 603 - 7806 4097
Fax: 603 - 7806 2272

dustry. New opportunities are opening

up for vegetable oils like palm oil. Russia is showing positive growth in the
consumption of such oils in an environment where the domestic foodprocessing sector is also expanding.

mayonnaise and margarine. Some of

the major producers are Nizhegorodsky
MZhk JSC, Moskovsky Margarinovy,
Samara Fats and Oils, Evdakovo Fat
and Oil, Novosibirsk Fat and Oil. Local
cuisines as well as consumer habits
require high content of fat for cooking
and frying. Margarine is a relatively important type of fat in the consumer's
diet, and some segments of the population still prefer margarine for cooking,
rather than vegetable oil.

Russia produced about 2.6 million metric tonnes of edible oils and fats in
2005. Sunflower oil is the most important vegetable oil produced, accounting
for 1.99 million metric tonnes or almost
75 per cent of the countrys edible oils
Margarine production is
and fats output.
an important industry in
Animal fats such as
POCPA Sets Higher Export
Russia. Total margarine
butter and lard are
Opportunity
production in 2004 and
the next highest oils
2005 has been estimated at 560,455
and fats produced and these two fats
metric tonnes and 629,625 metric toncombined accounted for about 410,000
nes respectively. The bulk of all margametric tonnes or 15.7 per cent of the
rine produced in Russia is cooking martotal production in 2005.
garine, followed by cooking fats and
Traditionally, Russia has never had a
table margarine at 15 per cent and 10
sufficient domestic supply of oilseeds to
per cent respectively. Russia has a total
maintain profitably levels of oil and fat
installed capacity for the production of
production. That is why the country has
900,000 to one million metric tonnes of
to continue importing between 900,000
margarine.
and one million metric tonnes of oils
and fats annually. Russias imports are
Gaining share for palm oil
dependent on its own domestic oilseed
Substantial quantities of palm oil have
production as well as global prices of
been coming into Russia. From 1996 to
oils and fats. Total oils and fats im2000, palm oil imports into Russia have
ported last year surpassed 959,000
grown by 31 per cent, reaching 300,000
metric tonnes, consisting of a mix of
metric tonnes in 2002. In 2004, total
vegetable oils such as palm, sunflower,
palm oil imports continued to increase
soybean and lauric oils. Palm oil acdespite the fall in overall imports, as
counted for about 40 per cent of total
illustrated in Figure 1 (on page 4). CurRussian oil imports last year, followed
rently, the import of palm oil by Russia
by sunflower oil at 18 per cent.
has been estimated at 510,000 metric
According to Russian statistics in 2005,
tonnes.
the country produced 551,414 metric
Most of the palm oil imported by Russia
tonnes of mayonnaise, 539,000 metric
is of Malaysian origin, and some of this
tonnes of margarine and 2.2 million
is sourced from the West European nametric tonnes of vegetable oils which
tions. Palm oil is imported either by
were for retail sales or processed into
(Continued on page 4)

Palm Oil Rich with Natures Goodness, Your Natural Choice

Page 2

Malaysian Palm Oil FORTUNE

Chinas Oleochemical Industry

Chinas GDP growth rate touched 9.9
per cent in 2005 and was valued at
US$2.225 trillion in 2005. This was a
marginal improvement of 0.5 per cent
over a growth rate that has held steady
at 9.4 per cent since 1978.

Table 1: Soap and Detergent Production ('000 tonnes)

Production ('000 Tonnes)

In Chinas manufacturing sector, oils

and fats used in the non-food sector
are largely in the form of oleochemicals
for the production of soaps, detergents,
cosmetics, perfumes, toothpaste and
surfactants; and for the production of
fatty acids and their derivatives.
Soaps and detergents
Soap is one of Chinas oldest oleochemical products, the manufacture of
which dates back to 1903. In 1988, the
output peaked at 1.19 million tonnes,
but has since been overtaken by detergent manufacture. Soap production has
stabilised at 600,000 tonnes, although it
saw a spike to 703,000 tonnes in 2003
because of the SARS outbreak. The
growing detergent industry focuses on
liquid products (Table 1).
The soap production landscape has
changed from one of cottage industries
utilising soap noodles that used to produce 300,000 tonnes a year. Under the
planned economy, the soap and detergent sectors were separated. Chinas
entry into the market economy removed
this artificial barrier, and with competition and the resulting price war, the
small companies folded. Today, nine
producers hold more than 70 per cent
of the market share for household
cleaning products.

Soap
Detergent
of which:
Powder
Liquid

2000

2001

2002

2003

2004

2005

600
3,220

653
3,358

562
3,530

703
4,088

655
4,364

716
4,944

2,413
807

2,502
856

2,605
935

2,812
1,276

2,726
1,637

2,941
2,043

Source : National Statistics Bureau

private investment has seen several

large facilities coming onstream in
Shanghai, Jiangsu and Zhangjiagang.
Capacity is expected to double within
two years and this will likely lead to
surplus output and price competition.

Fatty acids
Expansion in the use of industrial auxiliaries, especially for the plastics and
rubber industries, is driving the development of the fatty acids industry,
which began in the 1960s. The main
products are stearic acid and oleic acid,
which are used for paints and lubricants
as well as in auxiliaries for the rubber
and plastic industries. Introduction of
advanced oil/fat equipment for splitting
has expedited the growth of this industry. In 2003, production capacity
reached 450,000 tonnes, with fatty acid
output hitting 350,000 tonnes. Of the
100 manufacturers, more than 15 have
an annual production capacity exceeding 10,000 tonnes.
Half of the raw materials used comprised imported palm oil, palm kernel
oil, coconut oil and tallow. The balance
is residue from the restaurant and food
processing sectors. Deep processing of
fatty acids is limited because of the lack
of research and development efforts.
China imports more than 100,000 tonnes of fatty acids each year to meet
industrial demand (Table 2). Increased
but uncoordinated foreign and domestic

Table 3 : Fatty Alcohol Manufacturers

Company

Location

Volume
(MT)

Jilin
Petrochem

Jilin, Jilin

40,000

Fushen
Detergent

Fushen,
Liaoning

50,000

Huaneng

Dalian, Liaoning

15,000

Sino-Light
Chemical

Jianmen,
Guangdong

12,000

Huaxin

Dengta, Liaoning

60,000

Dongtai

Wuxi, Jiangsu

20,000

Phoenix

Lanxi, Zhejiang

15,000

Norther

Dengta, Liaoning

80,000

Shuangle

Shanghai

20,000

Sasol-Wilmar

Lianyungang,
Jiangsu

60,000

Table 2: Import of Oils, Fats and Related Products, 2005

Product
Palm Stearin

Volume
(tonnes)

Change (%)

1,492,433

1.74

Stearic acid

151,694

-10.02

Product

Volume
Change (%)
(tonnes)

Tallow

259,368

-11

Fatty alcohols

154,332

14.05

Coconut Oil

112,176

40.21

C12,16,18 oils

16,187

5.34

Glycerin

58,973

29.06

Fatty alcohols
This sector is keeping pace with demand generated by economic development. Fatty alcohols are used as raw
material in the detergent industry.
China has a capacity of about 200,000
tonnes per year, but still imports more
100,000 tonnes. Domestic capacity is
expected to increase by some 100,000
tonnes over the next few years (Table
3).

Source : National Statistics Bureau

(Continued on page 3)
Palm Oil Rich with Natures Goodness, Your Natural Choice

Page 3

Malaysian Palm Oil FORTUNE

Making Inroads Into Turkeys Margarine Industry

Recent statistics released by Turkish margarine and vegetable oil producers indicates that the import of Malaysian palm
oil into Turkey for first half of 2006 has risen sharply. The export of palm oil from Malaysia for the period January to June
2006 reached 163,000 metric tonnes, which is a 45 per cent
increase over that for the same period last year.

Since then, the production has been increasing by about five

to six per cent a year, making margarine production a key
area of Turkeys solid fats sector. Last year, the production of
margarine topped 756,000 metric tonnes. The major types of
margarine produced are table margarine, tub margarine and
industrial fats.

The main raw materials used in margarine are hydrogenated

This large increase can certainly be attributed to increased
liquid oils such as cottonseed oil, sunflower oil and RBD palm
awareness of health issues by the average Turkish consumer,
olein. More cottonseed and sunflower oils are used than any
where there is a trend towards the reduction of the trans-fatty
other oil since both these oils are readily available, either loacids content in the countrys production of margarine and
cally or through imports from the neighbouring European
other food products. This is especially so after most European
countries.
countries are contemplating legislation against trans-fatty acids in food products, while the Food and Drugs Administration
The composition of palm oil used
of the United States has recommended
reducing the content of trans-fatty acids .production has been increasing by depends very much on the price of
about five to six per cent a year, mak- the raw material. The attractive price
in foods to less than one per cent.
ing margarine production a key area for palm oil the past four to five years
has prompted wider usage of the oil
The Turkish food industry is now taking of Turkeys solid fats sector.
as the major raw material for margasteps to substantially decrease the use of
rine production. Previously, the ratio of cottonseed or sunpartially hydrogenated fats, leading to the need for a replaceflower oils to palm oil would vary from 80:20 to 60:40. Howment that will, among other things, provide the margarine,
ever, in recent years, the ratio of palm oil has increased up to
shortening and spreads with the required functionalities and
70 per cent.
characteristics. This is where palm oil find its niche.
There are seven major margarine and shortening producers in
Turkey, located mostly in Istanbul, Adana and Izmir. In 1990,
margarine production was estimated at 350,000 metric tonnes
and over the 15 years up to 2005, production has risen to
756,000 metric tonnes or an average of 7.7% per year.

(Continued from page 2)

The large increase in margarine consumption in the country

has been influenced by the growing trend across Europe to
use less products with trans-fatty acids and to opt for healthier
and nutritious foods. There has also been increasing promotional campaigns in mass media for better health.

Table 4 : Fatty Amines Manufacturers

Fatty amines

Location

Volume
(tonnes)

Feixiang Chem

Zhangjiagang, Jiangsu

20,000

Huarun Oleochem

Boxing,Shangdong

20,000

Tianyu Oleochem

Luzhou, Sichuang

6,000

Company

Both primary and tertiary amines are produced for use in cationic and amphoteric surfactants. Part of the output of these
amines is exported. Backed by excellent technology, the production of tertiary amines achieves yields of more than 95 per
cent. Three producers jointly account for more than 40,000
tonnes of primary amines annually (Table 4).

Primary Amines :

Tertiary Amines :

Glycerin

Feixiang Chem

Zhangjiagang, Jiangsu

18,000

Annual domestic needs amount to 80,000 tonnes, of which

40,000 tonnes are imported. China has the technology to
make glycerin, through chemical synthesis, fermentation and
recovery as a by-product from the splitting of oils and fats.
However, production has been affected by a drop in the
manufacture of soap and is now dominated by the splitting of
oils and fats. Imports are expected to decline soon, but applications may be extended.

Jingwei Chem

Shanghai

4,000

Tiannv Chem

Tianjin

5,000

Sengjie Chem

Zibo,Shangdong

2,000

Boda Chem

Lin'an, Zhejiang

3,000

Baoyu Chem

Dongguan,Guangdong

3,000

Palm Oil Rich with Natures Goodness, Your Natural Choice

Page 4

Malaysian Palm Oil FORTUNE

(Continued from page 1)

Figure 1: Growing Trend of Palm Oil Import

Total

Tonnes
1,200

Palm Oil

Tonnes
600

1,000

500

800

400

600

300

400

200

200

100

counting for approximately 60 per cent of the total palm oil

products (Table 1). RBD palm olein and palm stearin are the
next important fractions, with combined volume of 105,306
metric tonnes or 43 per cent of the total export by Malaysia.
Other palm products exported from Malaysia include hydrogenated fractions of palm oil.
Table 2 : Retail Sales of Confectionery Related Products
2000

2002

2002

2003

2004 CAGR
(%)
Volume ('000 metric tonnes)

Chocolate
confectionery

381

421

457

490

Confectionery

819

877

929

976

Biscuits

325

333

339

348

Bakery
products

7,897

519

8.02%

1,009 5.34%

0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

manufacturers or through trading companies. Much of the

vegetable oils are imported in bulk, which means the processors use the bulk oil to produce margarine and mayonnaise.
Some of the major importers of palm oil, which accounted for
about 50 percent of the volume imported in 2005, are Fregat
Ltd, Gammahim JSC, Nizhegorodsky MZhk JSC, Baltic Trade
Service and Evdakovo Fat and Oil.
WTO and the Future of Russian Trade
Malaysia and Russia have also concluded their talks on Russias accession to the World Trade Organisation (WTO) with
the signing of a protocol on bilateral negotiations. The package of concessions accorded by Russia to Malaysia covers
tariff reductions on 438 products, including palm oil and margarine. Upon accession to the WTO, Russia has agreed
to bind all market access concessions accorded to WTO
Table 1 : Malaysias Exports of Palm Oil to Russia

The cost of credit has been another crucial factor in determining the extent of Russian imports. When Russia was faced
with a financial crisis, the sovereignty of its banking system
posed a major commercial challenge that affected many importers. The profound changes have led to a situation where
trading with Russians has become difficult, unless the supplier
knows the customer well. In relation to this, Malaysia has offered the POCPA facility to the Russians and this
facility, if successfully used, can pave the way to
more regular and consistent imports.
Annual

RBD PS

Others

Total PO

1998
1999
2000
2001
2002
2003
2004

11,795
9,693
16,062
53,282
59,888
76,623
111,135

10,580
5,579
1,816
10,354
15,873
4,915
20,532

20,498
31,330
45,788
38,602
32,954
22,833
37,179

1,201
562
11,445
26,465
30,976
12,881

42,873
47,803
64,228
113,683
135,180
135,347
181,727

11.5%
34.4%
77.0%
18.9%
0.1%
34.3%

2005

129,888

69,799

35,507

10,681

245,876

35.3%

Among the palm products being imported, RBD palm oil is the
most important fraction being sought. In 2005, about 129,888
metric tonnes of RBD palm oil were exported to Russia, ac-

7,836 7,753 7,662 7,594 -0.97%

The size of the confectionery market in Russia can be considered one of the largest in the world. Although the 1998 financial crisis affected the import s of some confectionery products,
feedback from industry indicates that Russian production figures are slowly rising. For example, retail sales of confectionery products are estimated to grow between five and eight per
cent per annum during the 2000 - 2004 period (Table 2).

RBD PL

members and the concessions will be applicable to all member countries, in line with the MFN principle.

2.18%

Source : Russian Association of Confectioners & Bakers; Euromonitor.

RBD PO

Source : MPOB

355

Growth
(%)

Although the current season sees a higher supply

of sunflower oil in Russia, the demand for this oil is
expected to surge, especially from Western Europe
to supplement its demand, resulting from the shifting of some rapeseed oil for use as biofuel. The
price of palm oil will determine its attractiveness to
Russian users. Since margarine produced in Russia has a high content of hydrogenated sunflower
oil, there are ample opportunities for palm oil to be
blended with the locally produced sunflower oil for
optimum functionally and economically.

Russias per capita consumption of oils and fats of 22.5kg is

relative low by European standards. This could well mean
greater opportunities for Malaysian palm oil exporters if they
market more aggressively in Russia.

Palm Oil Rich with Natures Goodness, Your Natural Choice

Page 5

Malaysian Palm Oil FORTUNE

American Heart Association Issues New Diet

and Lifestyle Recommendations
New diet and lifestyle recommendations, intended for healthy
Americans aged two years and above, have recently been
released by the American Heart Association (AHA). The recommendations not only stress a healthy diet, they also emphasise the importance of a healthy lifestyle in efforts to combat
the nations No. 1 killer - cardiovascular disease.
A panel of specialists in nutrition and heart disease reviewed
more than 90 scientific publications to update the previous
dietary advice the AHA released in the year 2000. The new
recommendations tell Americans to combine physical activity
and adopt heart-healthy eating habits.
Among the recommendations are:

Reduce further saturated fat and trans fatty acids in

the diet;

Be physically active and maintain a healthy weight;

Cut back on beverages and foods with added sugar

as well as minimise the intake of salt;

Stay away from the use of and exposure to tobacco

products; and

Achieve and maintain healthy cholesterol, blood pressure and blood glucose levels.

Eat a variety of nutrient-rich foods, such as vegetables and fruits, fish, whole-grain and high fibre foods;

Apart from educating the general public, the new diet and lifestyle recommendations also list ways medical practitioners,
restaurants, the food industry, schools and local governments
can help the general public to put the recommendations into
practice. The suggestions include displaying the caloric content of each food item prominently on menus, reducing portion
sizes, limiting the use of trans fatty acids and using lowsaturated fatty acid oils in food preparation.
Another major change in the dietary recommendations is a
lower goal for saturated fat from less than 10 per cent to
less than seven per cent and establishing a limit of less
than one per cent for trans fatty acids in the total calorie count
of each food item. The new recommendations do not insist that
Americans change their lifestyle totally. However, consumers
are encouraged to make a few modifications to their current
habits by cooking with healthier oils and balancing calories
consumed with calories burned through exercise.
Although avoiding trans fatty acids and keeping a healthy diet
is challenging as there are increasing numbers of Americans
eating food prepared outside the home, restaurants and the
food industry have been urged to work more aggressively to
help consumers eat healthily by avoiding the use of partially
hydrogenated oil, which is the main source of trans fatty acids.
(Continued on page 7)

Pakistan Refining Business

Despite being an agricultural based economy, Pakistan has
always been a net importer of oils and fats. Heavy dependency
on the import of oils and fats has been attributed to high domestic consumption. Domestic production is unable to meet demand because farmers concentrate on conventional crops such
as wheat, rice and sugarcane. Thus, during the last three decades, the import of edible oils has surged from a mere 150,000
tonnes to 1.7 million tonnes, mainly monopolised by palm oil.
The success of palm oil in this region is attributed mainly to its
naturally semi solid nature. Pakistanis prefer semi-solid fats as
their daily cooking medium. Although consumption of liquid oils
is gaining popularity, more than 65 per cent of Pakistani consumers prefer to use Vanaspati as their cooking medium. Keeping this in view, RBD palm oil has proven to be the most economical raw material.
With the availability of RBD palm oil, the chemical refining industry in Pakistan has flourished in the last two decades. Till the
beginning of 2001, the oils and fats industry in Pakistan consisted of 104 chemical refining units and only one physical refin-

ing factory, which is Evian Oil and Fats, established in the

mid-1990s. With the availability of imported RBD palm oil, the
company found it extremely difficult to compete, and it suffered huge losses over the past five years, while operating at
only 20 per cent capacity.
The turnaround or the new era for the Pakistani oils and fats
industry came in 2001 when the import duties on palm olein
and CPO were reduced, making RBD palm oil comparatively
less economical to be imported. The basis for this change
was to encourage the import of soft oils and to encourage
physical refining in the country. Since then, palm olein has
become the significant palm products imported, surpassing
traditional RBD palm oil imports.
While the import of palm olein has been showing steady
growth, the physical refining industry has also begun to show
a promising future, with greater investment in new physical
refining plants. Pakistan will have eight physical refineries
with an annual capacity of 1.13 million tonnes by end of 2006.

Palm Oil Rich with Natures Goodness, Your Natural Choice

(Continued on page 7)

Page 6

Malaysian Palm Oil FORTUNE

Philippines Proves to be a Strong Buyer of Palm Oil

Huge increases of 84 per cent and 62
per cent for the import of edible oils and
fats by the Philippines in 2004 and
2005 have stolen the limelight away
from all the oils and fats importing
countries - given the fact that this country is the major producer, exporter and
obviously a traditional consumer of
coconut oil. The import of palm oil tripled in 2004 and grew more than double last year!

2,000.0
1,800.0
1,600.0
1,400.0
1,200.0
1,000.0
800.0
600.0
400.0
200.0
0.0

Can the growth in palm oil imports by

the Philippines be sustained, or at least
maintained at the same volume in the
years to come?

Total demand for oils and fats in the

Philippines amounted to 653,000 metric
tonnes in 2005. Of this, cooking oils
and fats made up 62 per cent of the oils
consumed, followed by oleochemicals
which utilised approximately 17 per
cent. Other applications for oils and fats
in the country were for instant noodle
frying (five per cent), snack frying (four
per cent), bakery and
PO Import vs CNO Production ('000 MT)
biscuit manufacturing
250.0
(four per cent).
200.0

According to Euromonitor, the average annual

growth rate for oils and
100.0
fats consumed by the
50.0
food sector is estimated
at six per cent for the
0.0
next four years until
2005
2009 and this is equivalent to 630,000 tonnes
of oils and fats demanded by the sector. Projecting a
three per cent growth in demand of oils
(primarily coconut oil) for the oleochemicals and other sectors, the total
oils and fats requirement for the Philippines by 2009 will reach 820,000 tonnes.
150.0

1998 1999 2000 2001 2002 2003 2004

CNO-Production

PO-Import

Obviously, the decline in output has

affected the price competitiveness of
coconut oil in the country vis--vis imported palm oil, allowing palm oil to
gain some market share from coconut
oil. Even though the production of coconut oil in 2004 and 2005 did not dip
significantly, the import of palm oil
surged tremendously, due to a few
other reasons.
First, increased global oleochemicals
production capacity, for which coconut
oil is one of the primay raw materials,
has led to increased demand for this
oil, and ultimately the market equilib-

Import ('000 MT)

Production ('000 MT)

Looking at past trends, the highest import volume of palm oil into the Philippines prior to 2004 was recorded in
2000 - at approximately 63,800 tonnes.
This was mainly attributed to the poor
output of copra in the preceding year.
In fact, the import volume of palm oil
has been closely linked to the coconut
oil production in the country prior to
2004 as the figure below shows.

rium equation resulted in the increase

in coconut oil prices. Secondly, the
reduction of import duty on palm oil
under the ASEAN Free Trade Area
Agreement (AFTA) to five per cent
caused palm oil to become more affordable in the midst of increasing coconut
oil prices.

The Philippines Government is also

aggressively promoting the use of biodiesel to reduce reliance on imported
petroleum. It is estimated that a one per
cent inclusion of coco-methyl ester
(CME) in diesel for the transportation
sector will require 70,000 tonnes of
coconut oil annually for the production
of CME. To sum up, the demand for

oils and fats in the country is estimated

to reach 890,000 tonnes by 2009, with
cooking oils and fats remaining the major consuming sector.
While the demand for oils and fats
shows encouraging growth, its supply
shows otherwise. Copra production has
been fluctuating, largely attributed to the
biological cycle of the tree, with production levels ranging between 1.25 million
tonnes and 2.27 million tonnes during
the last 10 years. This creates an uncertainty over the total amount of coconut oil being produced by the Philippines. Long-term prospects for any
dramatic production growth of coconut
oil are dampened by the growing number of old and unproductive trees
(estimated at 15 per cent of the coconut
trees), compounded by the cessation of
the Philippine Coconut Authoritys fertilizer programme, which was funded by
the World Bank in 2000.
Based on historical production trends,
coconut oil production is forecast at 1.5
million tonnes by 2009. Other oils and
fats produced (including palm oil) will
contribute approximately 200,000 tonnes to the local supply, thus resulting in
a total supply of about 1.7 million tonnes
in 2009.
Should the demand for lauric oils in the
global market (mainly from the oleochemicals sector) grow at three per
cent, 1.3 million tonnes of coconut oil
will be exported by the Philippines. This
will leave only 400,000 tonnes of locally
produced oils and fats available for the
domestic market, with the difference
having to be supplemented with imports,
indicating that 420,000 metric tonnes of
oils and fats need to be imported in the
year 2009.
Being the most price competitive oil,
palm oil stands a greater opportunity for
supplementing the shortfall in oils and
fats supply in the Philippines, while Malaysia stands to benefit from her proximity with the country vis--vis other oils
and fats suppliers.

Palm Oil Rich with Natures Goodness, Your Natural Choice

Malaysian Palm Oil FORTUNE

Page 7

(Continued from page 5)

Malaysian Palm Oil Council (MPOC)
2nd Floor Wisma Sawit
Lot 6, SS 6, Jalan Perbandaran
47301 Kelana Jaya, Selangor
Tel : 603-7806 4097
Fax : 603-7806 2272
www.mpoc.org.my

American Palm Oil Council

Suite # 690
21515 Hawthorne Blvd.,
Torrance CA 90503, USA
Tel: +1(310)944 3910
Fax: +1(310) 944 3544
www.americanpalmoil.com
E-mail: kassim@americanpalmoil.com
Contact : Mohd Salleh Kassim
MPOC Africa Regional Office
5 Nollsworth Crescent,
Nollsworth Park
La Lucia Ridge Office Estate,
La Lucia 4051, KwaZulu-Natal,
South Africa
Tel: +27(31)5666 171
Fax: +27(31)5666 170
E-mail: kumar@mpopc.co.za
Postal Address:
P.O.Box 1591
M.E.C.C. 4301
South Africa
Contact : Uthaya Kumar
MPOC Bangladesh
62-63 Motijheel Commercial Area,
7th Floor, Amin Court Building,
Dhaka, Bangladesh
Tel: +88 (02) 9571216
Fax: +88 (02) 9551836
E-mail: mpopc-bd@citech.net
Contact : Fakhrul Alam
MPOC Shanghai, China
Shanghai Westgate Mall Co. Ltd.
Room 1610B, 1038 Nanjing Rd. (w)
Shanghai 200041, P. R. China
Tel: +86(21)6218 2085 / 62182086
Fax: +86 (21) 6218 1125
E-mail: mpopc@mail.online.sh.cn
Contact : Teah Yau Kun
MPOC Pakistan
11 3rd Floor, Leeds Centre
Main Boulevard Gulberg 111
Lahore, Pakistan
Tel: +92 (42) 5716600/ 5716601
Fax: +92 (42) 5716602
E-mail: faisal@mpoc.org.pk
Contact : Faisal Iqbal
MPOC India
S-4, New Mahavir Building
Cumballa Hill Road, Kemps Corner,
Mumbai 400 036
Tel: +91(22)56550755 / 56550756
Fax:+91(22)56550757
E-mail: bhavna@mpopc.org.my
Contact : Bhavna Shah
MPOC Europe Regional Office
31 Avenue Emile Vendervelde
1200 Brussels Belgium
Tel: +(322)7748860
Fax: +3227794371
E-mail : zainuddin@skynet.be
Contact : Zainuddin Hassan
MPOC Dubai
#202, Al-Safeena Building
Near Lamcy Plaza
Zabeel Road
Dubai, UAE
Tel: +97(14) 3358571
Fax: +97(14) 3358572
E-mail: zafri@mpoc.ae
Contact : Ahmad Zafri Ahmad Nawawi
MPOC Regional Office (East Suez)
3 Gamal E1-Din Afify Street
Nasir City, Zone No.6
11371 Cairo, Egypt
Tel: +20 (2) 2738108
Fax +20 (2) 2738106
E-mail: hatem@mpocegypt.com
Contact : Hatem Magd El Din Safaan

In June 2006, the Center for Science in the Public Interest (CSPI) sued Kentucky Fried
Chicken (KFC) to try to stop the company from using partially hydrogenated oil, or at
the very least, for signs to be posted in KFC outlets notifying customers that many KFC
foods are high in trans fatty acids.
In February 2005, McDonald's paid out US$8.5 million to settle a lawsuit by CSPI over
trans fatty acids in its cooking oils. McDonald's will donate US$7 million to the American Heart Association and spend another US$1.5 million to inform the public of its
plans on the use of trans fatty acids.
With more and more pressure on all food sectors in the United States to halt the use of
partially hydrogenated oil, the perfect answer for zero trans fatty acids use is palm oil,
which does not require hydrogenation because of its natural solid contents.
In order to capture the large American oils and fats market, the Malaysian palm oil
industry has to be more proactive in getting in touch with American food manufacturers
and restaurants in order to work together palm based formulations that are acceptable
to the American consumers.

(Continued from page 5)

Impact on industry
The increase in refining capacity from 0.25 million tonnes in 2001 to 1.1 million tonnes
in 2006 implies that more feedstock is required. Many in the industry anticipate that
the increasing import of CPO seems to suggest that Pakistan may be following Indias
footsteps by switching to crude instead of refined oils.
Further analysis of this issue indicates that the situation may not be that grave for the
market access of refined products. The success of the physical refining industry in
Pakistan is dependent on a few factors and if there are any changes made, the viability
of this industry will be seriously affected.
In fact, imported RBD palm olein, on which the
duty is similar to that on CPO, is still giving tough
competition to locally-produced RBD palm oil.
With a refining cost as high as US$25/tonne, the
price differential between CPO and RBD palm
olein has become a crucial factor. If the differential between the prices of these two oils
is less than US$35, then it will become increasingly difficult for physical refiners to
compete with imported RBD palm olein.
It appears likely that Pakistan
will maintain a reasonable
balance between crude and
refined oil imports.

Although the current installed physical refining capacity has reached almost 1.1 million
tonnes, none of the six operating units are running at more than 50 per cent capacity.
This can also be further established by the total CPO import, which has todate reached
176,161 tonnes. There is a strong likelihood that the volume of imports will hit 300,000
tonnes by the end of 2006, which is approximately 25 per cent of the total installed
capacity.
This trend is mainly due to stiff competition from RBD palm olein and fierce competition
between refineries for ex-tank sales. Keeping all the above factors in view, it appears
likely that Pakistan will maintain a reasonable balance between crude and refined oil
imports.

Palm Oil Rich with Natures Goodness, Your Natural Choice