China’s import of palm oil is expected to reach six million tons next year due to increasing demand, says the Malaysian Palm Oil Council.
Its regional manager for China, Desmond Ng, said as the Chinese economy and population continued to grow, demand for palm oil would also increase steadily but at a slower pace in tandem with that of gross domestic product (GDP).
“Direct usage of palm oil or substituting other oils in the food processing industry may decline.
“The further processing of palm oil will play a bigger role for the product in the country,” he said in his presentation on the Outlook of China’s Oils and Fats Industry in 2013 at the Palm Oil Trade Fair and Seminar.
Ng said this would also enable palm oil to break away from the current price discount trend, as further processing would add value and place the commodity in a different level playing field against other vegetable oils.
“Due to the increase in palm oil processing capacity in southern China, its import through Guangdong province will continue to increase,” he added.
Ng, however, said that monthly palm oil stocks had increased sharply since the end of 2011 in China, reaching a record high of almost a million tons between February and May this year.
“This put pressure on the palm oil price in the physical market with a subsequent moderate decline.
“The palm oil price was supported temporarily earlier this year, despite the record stock level, by the sharp decline in soybean production in South America,” he added.
He said that could not be sustained for long and palm oil prices had been dropping continuously since April this year.
Ng said with the low soybean import duty in China, locally produced soybean oil would always have the cost discount against imported soybean oil by 6%.
“This, again, put pressure on imported palm oil and also partly became the reason for the discount in the local palm oil price against landed cost in China,” he added
Source: The Star Online Oct 2012