PUTRAJAYA, April 15 — Demand for palm oil is set to continue rising from traditional importing countries such as China and India, driven by global geopolitical uncertainties as well as their need to ensure energy and food security, said Plantation and Commodities Minister Datuk Seri Noraini Ahmad.
She said China, as Malaysia’s second-largest palm oil importer, is showing a tendency to increase stockpiles as a precautionary measure against potential logistical disruptions in the Strait of Hormuz.
She said China’s high dependence on oil imports from Iran, and rising global energy prices, has increased input costs for its downstream industries such as oleochemicals and biodiesel, thereby driving demand for Malaysian palm oil as a more competitive alternative.
“Given that China imports almost 90 per cent of its oil from Iran, rising global energy prices have increased input costs for their downstream industries (oleochemicals and biodiesel).
“This has led to demand for Malaysian palm oil as a more competitive raw material alternative to soybean oil, which has been affected by United States tariffs,” she told Bernama.
Noraini said this will indirectly shift demand toward sustainable raw materials and hi-tech components in line with their focus on the green economy and food security.
For India, Malaysia’s largest palm oil importer, she said the rapid growth of the country’s manufacturing and infrastructure sectors continues to boost demand for Malaysia’s key commodity, particularly palm oil and oleochemical products.
She said although India is facing inflationary pressures amid rising global crude oil prices, palm oil remains the preferred choice due to its cost efficiency over other vegetable oils.
“Geopolitical uncertainty has caused global vegetable oil prices to rise in line with crude oil prices, putting pressure on importers’ profit margins in India. However, palm oil remains the preferred choice due to its cost efficiency compared to other vegetable oils,” she said.
Meanwhile, Noraini said her ministry is focusing on diversifying export value by strengthening downstream products such as oleochemicals, specialty fats, and pharmaceuticals, which have more stable demand even in challenging economic conditions.
She said this approach is also supported through bilateral cooperation via platforms such as the Regional Comprehensive Economic Partnership (RCEP) for China and the Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA).
Yesterday, Kenanga Investment Bank Bhd said crude palm oil inventories are expected to decline in the second quarter of this year due to higher export demand as buyers increase stock holdings amid uncertainty surrounding the ceasefire situation in West Asia.
It said ending inventory for March was the lowest so far this year and added that despite stronger month-on-month production, palm oil inventories closed 16 per cent lower in March due to a surge in exports to nearly a 10-year high.
Palm oil biodiesel strategic bet to reduce fossil fuel dependence
In addressing efforts to reduce reliance on imported fossil fuels, Noraini said the government is committed to increasing the use of palm oil biodiesel through the implementation of the National Biodiesel Programme.
“Dependence on fossil fuels can be reduced through increasing biodiesel blending to B20 and B30,” she said.
She said most areas in Malaysia use a B10 blend in the transport sector, indicating significant room for increased biodiesel usage.
According to her, the country’s biodiesel production in 2025 stood at 975,207.29 tonnes compared to a maximum capacity of 2.36 million tonnes, showing that biodiesel plants are still operating below actual capacity.
Yesterday, Economy Minister Datuk Seri Akmal Nasrullah Mohd Nasir said the government has agreed to increase the biodiesel blending rate from B10 to B15, starting with B12, at no additional cost to extend diesel availability amid the West Asia crisis.
He said the ongoing implementation of B10 proves the foundation for its execution already exists, allowing higher biodiesel blending to be implemented using existing infrastructure.
“As a medium-term step, we must accelerate economic restructuring through the transition to renewable energy so that energy sources are more securely available domestically.
“In this context, the government is not only stabilising supply and prices, but also building long-term resilience, as recovery from this crisis is expected to take up to 18 months,” Akmal said at a global energy crisis briefing yesterday.
