In an article about another Malaysian producer there is an...

In an article about another Malaysian producer there is an indication of a margin of $US50/ton for biodiesel production. Both biodiesel prices and CPO prices are volatile but surely production for Sterling can't be far away.

Carotino Ups Capacity Utilization Of Biodiesel Units To 95%

Editor: Sharon Li
24 Oct 2008 10:17:31 GMT

KUALA LUMPUR --Malaysia's Carotino Bhd., has raised the capacity utilization of its biodiesel plants to almost 95% this month due to the favorable crude palm oil prices, a company executive said.

CPO is the basic feedstock used to manufacture palm-based biodiesel.

"Capacity utilization has been gradually raised because the current margins in biodiesel production are $40-$50/ton," U.R. Unnithan, executive director, said.

He didn't give details of the company's biodiesel exports but said most volumes were being shipped to Europe.

He also said the company's sales will likely not be affected by the upcoming winter months in Europe, when low temperatures can freeze palm oil, as Carotino produces winter-grade biodiesel.

Carotino has two biodiesel production units in Pasir Gudang in peninsular Malaysia's Johor province with an annual production capacity of 120,000 metric tons and 60,000 tons respectively.

Malaysia's biodiesel production got a fillip from July onwards after a sharp slump in CPO prices.

CPO prices have fallen around 60% since mid-July this year and are currently hovering around MYR1,500/ton.

Biodiesel prices are also falling on spillover weakness of crude oil and are currently being offered at slightly below $700/ton, free on board Malaysian ports but the lower CPO prices have enabled producers to absorb the lower rates.

A few months ago, Malaysian producers were selling biodiesel in a $1,000-$1,300/ton range.

The downtrend in CPO prices has continued in tandem with the slump in crude oil and this has ensured palm-based biodiesel production continues to be economically viable, said Unnithan.

Analysts said the companies that sold forward biodiesel earlier this year are getting higher returns, but they had simultaneously also locked in purchases of CPO, which was costlier then.

-By Sameer Mohindru, Dow Jones Newswires; (603) 2168-4278; [email protected]