Indonesian UCO exporters contest new regulation: Update

Adds details on association in paragraphs 1, 2, 3, 4 and 7.

Indonesian used cooking oil (UCO) exporters have formed an association to lobby against new export restrictions on the waste biodiesel feedstock that came into force on 24 January, sources close to the matter told Argus.

The 13-company membership represents around 90pc of the country's 25,000-30,000t/month UCO export capacity, according to newly-elected chairman Mr. Setiady Goenawan, director of collection firm CV Artha Metro Oil.

Members at yesterday's inaugural meeting agreed to slow domestic UCO buying and export offers over the next 3-4 days "so that we can get an audience with [the trade ministry] as soon as possible", said Mr. Goenawan, adding that exporters will continue to fulfill long-term contracts.

The association hopes an audience with the trade ministry will persuade it to drop domestic sales obligation rules for the UCO sector.

Exporters of UCO, palm olein and crude palm oil (CPO) must start submitting proof of domestic sales to obtain export licenses in line with new requirements Jakarta announced last week. The measure has been billed as a step to ease cooking oil prices by ensuring domestic supply at subsidised rates, but market participants are unsure why UCO has been included in the ruling.

Palm olein and CPO exporters can retail a percentage of their cooking oil domestically to conform to the new rules, but UCO exporters are generally not involved in palm oil production and do not have access to olein for domestic retailing.

"We already help poor people by buying their waste oil, why do we also need to buy and sell olein under these rules?", Goenawan said.

Indonesia's trade ministry could not be reached for immediate comment.

The restriction on Indonesian UCO exports may tighten southeast Asian supply and boost prices at a time when record CPO prices and flooding disruptions are already supporting values near all-time highs despite wavering prices for finished biodiesel UCO methyl ester. Argus assessed UCO fob Malaysia/Indonesia at $1,182.50/t for the last two weeks, almost 37pc higher than its value a year ago.

By Lauren Moffitt