Domestic palm oil consumption in Indonesia could surge by about 3M tonnes if the government implemented its palm oil-based biodiesel blending mandate to 50% (B50), New Straits Times reported financial services company CIMB Securities as saying.
The company said this potential increase would represent about 6.2% of the country’s estimated 2024 crude palm oil (CPO) production of 48.2M tonnes, based on Indonesian Palm Oil Association (GAPKI) figures.
“We believe that if Indonesia implements B50, it would be supportive of CPO prices in 2026, as the additional demand would likely offset any negative impact from the higher US import tariffs on palm oil (19% for Indonesia and 25% for Malaysia, effective 1 August 2025),” the company added.
Eniya Listiani Dewi, director general of new and renewable energy at Indonesia’s Ministry of Energy and Mineral Resources, said the government was evaluating the feasibility of raising the biodiesel blend to 50% under the B50 programme.
However, no firm decision has been made to implement B50 in 2025, as the government is still consulting experts and assessing feedstock availability and processing capacity, according to the 18 July report.
To support the potential rollout, the ministry indicated that five additional biodiesel plants would be needed, with three under construction at the time of the report.
CIMB Securities said the implementation of B40 in Indonesia appeared to be on track to meet its 2025 biodiesel target and expected it to boost Indonesia’s domestic palm oil consumption by 2M tonnes and reduce its exportable surplus.
“We are also encouraged by the availability of funding for biodiesel subsidies. To recap, out of the 15.62M kilolitres allocated, 7.55M kilolitres or 48%, is earmarked for public service obligation (PSO) sectors such as public transport and is fully subsidised,” the company said.
“The remaining 8.07M kilolitres will be sold at market prices without subsidy, which explains why subsidised biodiesel consumption of 3.5M kilolitres is lower than total biodiesel consumption.”
CIMB Securities said the potential implementation of B50 was a key factor to watch, as it could tighten palm oil exports from Indonesia in 2026.
“The Indonesian Biofuel Producers Association (APROBI) projects that B50 would raise annual biodiesel demand from 15.6M kilolitres (B40) to approximately 19M kilolitres, while the Indonesian Ministry of Energy similarly estimates a need for about 19.7M kilolitres of biodiesel to run B50,” it added.
“To achieve this, Indonesia will need to add new plants as current installed capacity stands at around 19.6M kilolitres.”
Meanwhile, CIMB Securities said Malaysia had set the August gazetted CPO price at MYR3,864 (US$914)/tonne, resulting in an increase in the CPO export tax to 9% compared to 8.5% in July.
It added that the combination of a higher Malaysian export tax and the upcoming increase in US import duties from 10% to 25% could boost palm oil exports in July.
This could support CPO prices in the near term, the company said.
“We maintain our average CPO price forecast of MYR4,200 (US$993)/tonne for 2025,” it said.
