Shipment is temporarily held back following Indian govt’s announcement to restrict refined palm oil imports on Jan 8
by SHAHEERA AZNAM SHAH / pic by BLOOMBERG
PALM oil shipment to India has dropped almost 50% month-on-month in the third week of January likely due to the restrictions measures by the Indian government.
According to data from independent cargo surveyor SGS Malaysia Sdn Bhd, palm oil shipment to India fell 48.7% to 30,050 tonnes during the first 20 days of January compared to December last year.
The shipment in the first 10 days and 15 days dropped 41% and 67.1% respectively to 18,500 tonnes compared to the exports last month.
The shipment was temporarily held back between Jan 10 and Jan 15 following the Indian government’s announcement to restrict refined palm oil imports on Jan 8.
A policy revision from India’s Ministry of Commerce and Industry was circulated on its official website, changing the status of refined bleached deodorised (RBD) palm oil and RBD palm olein imports from “free” to “restricted”.
Based on data from the Solvent Extractors’ Association (SEA) of India, its country’s palm oil imports grew about 11% in December last year compared to the previous month.
However, its purchases from Malaysia had been on a continuous decline for five months, according to data from the Malaysian Palm Oil Board.
In December, India’s imports of palm oil from Malaysia dropped to a 15-month low of 138,647 tonnes. There has been friction between the two countries as Indian industry players have been unofficially avoiding the purchase from Malaysia after being unofficially told by its government.
Last year, the SEA was reported as requesting its members to halt imports from Malaysia as a sign to protest against Prime Minister Tun Dr Mahathir Mohamad’s criticism of the steps taken by the Indian government in Kashmir and its new citizenship laws.
Last week, Reuters reported that tonnes of refined palm oil shipments were stranded at Indian ports after the Indian government restricted the downstream products.
Bloomberg reported that if it’s not resolved, Malaysia’s US$1.4 billion (RM5.7 billion) of palm oil exports to India will be at risk if the country cannot find a new buyer.
Meanwhile, palm oil for nearterm delivery in Kuala Lumpur is trading at a substantial premium to more distant months, a pattern known as backwardation, showing the current shortage in supplies of the world’s most consumed cooking oil.