Kuala lumpur: Demand for palm oil is expected to continue increasing from traditional importing countries such as China and India, driven by global geopolitical uncertainty as well as their need to ensure energy and food security. Minister of Plantation and Commodities Datuk Seri Noraini Ahmad highlighted the growing trend during a recent statement.

According to BERNAMA News Agency, China, as Malaysia's second-largest palm oil importer, is increasing its stockpile as a precautionary measure against potential logistical disruptions in the Strait of Hormuz. This move is fueled by China's heavy reliance on oil imports from Iran and rising global energy prices, which have increased costs for its downstream industries like oleochemicals and biodiesel. As a result, Malaysian palm oil is being sought as a more competitive alternative.

Noraini explained, "Given that China imports almost 90 percent of its oil from Iran, rising global energy prices have increased input costs for their downstream industries (oleochemicals and biodiesel). This has led to demand for Malaysian palm oil as a more competitive raw material alternative compared to soybean oil, which has been affected by United States (US) tariffs."

For India, Malaysia's largest palm oil importer, the rapid growth of the country's manufacturing and infrastructure sectors continues to boost demand for Malaysia's key commodity, particularly palm oil and oleochemical products. Noraini noted that despite India facing inflationary pressures due to rising global crude oil prices, palm oil remains the preferred choice due to its cost efficiency compared to other vegetable oils.

Meanwhile, the ministry is focusing on diversifying export value by strengthening downstream products such as oleochemicals, specialty fats, and pharmaceuticals, which have more stable demand even in challenging economic conditions. This approach is also supported through bilateral cooperation via platforms such as the Regional Comprehensive Economic Partnership (RCEP) for China and the Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA).

Yesterday, Kenanga Investment Bank Bhd reported that crude palm oil inventories are expected to decline in the second quarter of this year due to higher export demand, as buyers increase stock holdings amid uncertainty surrounding the ceasefire situation in West Asia. It noted that March's ending inventory was the lowest so far this year, and despite stronger month-on-month production, palm oil inventories closed 16 percent lower in March due to a surge in exports to nearly a 10-year high.

In addressing efforts to reduce reliance on imported fossil fuels, Noraini said the government is committed to increasing the use of palm oil biodiesel through the implementation of the National Biodiesel Programme. She emphasized that dependence on fossil fuels can be reduced by increasing biodiesel blending to B20 and B30, with most areas in Malaysia currently using a B10 blend in the transport sector.

In a recent development, Economy Minister Datuk Seri Akmal Nasrullah Mohd Nasir announced that the government has agreed to increase the biodiesel blending rate from B10 to B15, starting with B12, without any additional cost, to extend diesel supply availability amid the West Asia crisis. He stated that ongoing implementation of B10 demonstrates that the foundation for its execution already exists, allowing higher biodiesel blending to be implemented using existing infrastructure.

Akmal highlighted the need for economic restructuring through the transition to renewable energy, stating, "As a medium-term step, we must accelerate economic restructuring through the transition to renewable energy so that energy sources are more securely available domestically. In this context, the government is not only stabilizing supply and prices, but also building long-term resilience, as recovery from this crisis is expected to take up to 18 months."