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China's Biodiesel Demand to Exceed Production by 2010

David Harman
Published 7/6/2007
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SHANGHAI (Interfax-China) -- China's biodiesel demand will exceed the country's domestic production by 2010, the National Grain and Oil Information Center said today.

China's annual demand for biodiesel is expected to reach 1 million tonnes in 2010, which is 20% more than the country's expected domestic biodiesel production volume.

Last year, China's biodiesel output was only about 300,000 tonnes, although production was affected by a shortage of raw materials.

"I think the physiological influence of biodiesel outweighs its actual influence on the edible oil market in the short term, as investors see profit potential from new demand for edible oils," a Yongan Futures analyst, surnamed Xu, said.

However, Xu said that biodiesel is being strictly controlled by the government, as edible oil price fluctuations have been affecting the country’s consumer price index. "The government is trying to avoid a second wave of CPI growth caused by rising edible oil prices," Xu said.

The search for renewable energy sources is a global trend. The development of biodiesel will support China's edible oil market, and prices will rise if biodiesel supply can't meet demand, Xu said.

Commentary

The NGOIC may be overly pessimistic in its assumptions. China is committed to a 25% usage of biofuel for transportation by 2020. CNPC, Sinopec and CNOOC have launched new production facilities, or are planning to do so.

In all, plants with a total of 3 million tonnes of capacity are under construction or being planned. Continued strength in crude prices will further encourage investment in this and other alternative fuel products.

Furthermore, the strain upon edible oils may not be that severe as alternatives are being introduced such as mass planting of the non-edible Jatropha nuts.

© Interfax-China 2007.

This article comes from Interfax China Commodities Daily, a daily digest produced by Interfax News Agency in Mainland China. To receive 10 free copies of this, please e-mail [e-mail].

SHANGHAI (Interfax-China) -- China's biodiesel demand will exceed the country's domestic production by 2010, the National Grain and Oil Information Center said today.

China's annual demand for biodiesel is expected to reach 1 million tonnes in 2010, which is 20% more than the country's expected domestic biodiesel production volume.

Last year, China's biodiesel output was only about 300,000 tonnes, although production was affected by a shortage of raw materials.

"I think the physiological influence of biodiesel outweighs its actual influence on the edible oil market in the short term, as investors see profit potential from new demand for edible oils," a Yongan Futures analyst, surnamed Xu, said.

However, Xu said that biodiesel is being strictly controlled by the government, as edible oil price fluctuations have been affecting the country’s consumer price index. "The government is trying to avoid a second wave of CPI growth caused by rising edible oil prices," Xu said.

The search for renewable energy sources is a global trend. The development of biodiesel will support China's edible oil market, and prices will rise if biodiesel supply can't meet demand, Xu said.

Commentary

The NGOIC may be overly pessimistic in its assumptions. China is committed to a 25% usage of biofuel for transportation by 2020. CNPC, Sinopec and CNOOC have launched new production facilities, or are planning to do so.

In all, plants with a total of 3 million tonnes of capacity are under construction or being planned. Continued strength in crude prices will further encourage investment in this and other alternative fuel products.

Furthermore, the strain upon edible oils may not be that severe as alternatives are being introduced such as mass planting of the non-edible Jatropha nuts.

© Interfax-China 2007.

This article comes from Interfax China Commodities Daily, a daily digest produced by Interfax News Agency in Mainland China. To receive 10 free copies of this, please e-mail [e-mail].



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