(Updates with analyst comment)
KUALA LUMPUR, Nov 23 (Reuters) - Malaysia will increase the minimum bio-content local producers must add to its biodiesel fuel for certain sectors to 10 percent from 7 percent starting on Dec. 1.
Primary Industries Minister Teresa Kok said in a radio interview with national news agency Bernama on Wednesday that the government had given the approval to implement the so-called B10 biodiesel mandate.
“The cabinet has approved the use of B10 and it will be implemented from December 1. We also have the agreement from the Federation of Malaysian Manufacturers that the industrial sector will use B7,” she said in the interview which was posted to Bernama Radio’s Facebook page.
Fuel stations in Malaysia currently use B7 biofuel.
Kok said with these measures, the use of palm oil locally was expected to double, without elaborating.
The B10 biodiesel programme will be implemented in the transport sector and other subsidised sectors in stages and will be mandatory from February 2019, Bloomberg News said on Thursday citing a letter from the Primary Industries Ministry to petroleum companies.
CIMB Research analyst Ivy Ng said the move would be positive for the palm oil market on expectations of increased consumption for biodiesel purpose in Malaysia.
“This could help reduce current high palm oil stock levels over time,” Ng said.
Inventories in Indonesia and Malaysia, the top producers of the tropical oil, are expected to rise in the next two months on slower demand from key buyers in winter months as palm oil solidifies. (Reporting by Liz Lee; Editing by Christian Schmollinger and Mark Potter)