Update COVID-19 in Indonesia: 70,736 confirmed infections, 3,417 deaths (9 July 2020)
6 July 2020 (closed)
USD/IDR (14,446) -14.00 -0.10%
EUR/IDR (16,385) +81.74 +0.50%
Jakarta Composite Index (5,052.79) -23.38 -0.46%
The US government plans to impose 40 percent import duties on biodiesel products that are shipped from Indonesia as the USA accuses the world's largest palm oil producer and exporter of dumping biodiesel products on the American market. As a result US vegetable oils (particularly soybean oil) lack competitiveness.
Earlier this year the US International Trade Commission had already concluded that there was a reasonable indication that both Indonesia and Argentina are dumping biodiesel exports on the US market. The main issue is that the Indonesian and Argentinian governments are subsidizing their national biodiesel output, hence being able to sell this output at less then fair value on the US market with the consequence that the US industry is affected.
If the USA will indeed impose high anti-dumping duties on Indonesian biodiesel exports, then there is concern that it will impact on Indonesia's crude palm oil industry because the USA is a good market for Indonesian crude palm oil and its derivatives.
In 2012 exports of crude palm oil (CPO) and derivatives to the USA were recorded at 186,000 tons. In 2016 the figure had surged to 1.1 million, reflecting robust growth, 350,000 tons of which was biodiesel. Biodiesel shipments from Indonesia were able to accelerate significantly in recent years on the back of the competitive prices.
Paulus Tjakrawan, General Chairman of the Association of Indonesian Biodiesel Producers (Aprobi), said that - if the US would indeed implement the 40 percent anti-dumping duties - Indonesian biodiesel exporters are likely to stop shipments to the USA. This would be a concern. Although the USA is not Indonesia's biggest market for biodiesel, shipments have surged 300 percent over the past three years. However, there is still hope because the Trade Ministries of Indonesia and the USA are expected to meet soon to discuss the issue. Perhaps some lobbying can limit the damage.
Still, it is key to search for alternative export markets for Indonesian biodiesel because policymakers in the USA and the Eurozone are not too friendly toward Indonesia's palm oil industry. Examples of alternative markets are China, India and Pakistan where biodiesel demand is expected to rise significantly in the years ahead.