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At Roundtable (RT) 2022 - Day 1 Observations
At Roundtable (RT) 2022 - Day 1 Observations
Segi Enam Research
PalmTrack—Sep 2022 Wrap Up
PalmTrack—Sep 2022 Wrap Up

Carbon Tax News: Updates from Singapore, EU, and Malaysia

Last Friday, Singaporean Finance Minister Lawrence Wong announced in his budget speech that the island nation’s carbon tax rate will be increased as part of Singapore’s efforts to reach net-zero emissions by or around 2050. At the moment, the current tax of S$5 per tonne of emissions will continue to be in force until 2023, and will be increased incrementally before reaching a rate of somewhere between S$50–80 per tonne by 2030. This was higher than initial expectations of a carbon tax increase to anywhere between S$10 and S$15 per tonne, with one expert, PwC’s Chris Woo, remarking “if we don’t tax that supply chain, another country will.”

Over at the EU, carbon prices on its emission trading scheme (ETS) have risen beyond expectations over the past year. This has prompted calls for authorities to address design flaws in the ETS, with recommendations from the European Green Party and Potsdam Institute for Climate Impact Research including reforms aimed at curbing excessive financial speculation. Traders are now reportedly becoming wary following the European Commission agreeing to look into ways to make trading activities more transparent.

From Trading Economics (accessed 21 Feb 2022): “EU carbon permits traded close to €90, down from a record €98.5 reached on February 8th, following news that EU lawmakers were mulling key reforms in the bloc’s carbon market, and higher energy output from non-polluting sources.”

In Malaysia, eyes are now on how national policy and regulators will deal with the Sabah state government’s proposal for the National Conservation Agreement (NCA), a 100-year mega carbon asset concession project in collaboration with Singaporean-based company Hoch Standard Pte Ltd. Social media is alight with the purportedly leaked document of the aforementioned agreement, with interesting comments—including remarks on the statement made by the Sabah Deputy Chief Minister just last week—from investigative website Sarawak Report.

On that note, the Sarawak government has also announced intentions to venture into a carbon credit project, with Mambong assemblyman Dr Jerip Susil revealing that the state may pass a legislation allowing for carbon credits trading to take place this year. In the meantime, the Malaysian government has agreed to the development of a Voluntary Carbon Markets to facilitate international carbon credit transactions.

PalmTrack—Mid-Feb Update for the Week

In the last two weeks on PalmTrack, we covered:

  1. Indonesia’s expanded palm oil export permit: The world’s major palm oil exporter has extended its export permit requirement for palm oil product to include other derivatives. Previously only applicable to crude palm oil (CPO), olein, and used cooking oil, the change now means that CPO and its derivatives, crude palm oil and its derivatives, as well as palm kernel expellers will be subjected to the permit.

  2. USCBP findings on Sime Darby: The US CBP on 28 Jan reported that it has “found evidence of all 11 of the International Labour Organization’s forced labor indicators on the Da Wang vessel and Sime Darby Plantation’s palm oil plantations.” PalmTrack has have been closely updating on certified palm oil and find that key market players concur on these problems on supply in key products.

  3. Tankers from Indonesia: Port calls for 24 Jan–6 Feb 2022 (14 days) count, c.80 palm-related tankers, with sample net tonnage c.450k (versus 14D to 23 Jan, c.60 tankers with sample net tonnage c.360k). These two weeks (24 Jan–6 Feb) the share of calls was slightly higher for North Asian, European, and South Asian ports.

  4. Rainfall: 30 days rainfall was est. 100–150mm across central Peninsular Malaysia, and over 200mm above normal up in central area of Sumatra. Typical 30-days rainfall in Jan–Feb is 100–200mm on Sabah, Sarawak, south Sumatra, and across Kalimantan.

  5. Palm Biofuel - Part #2: Resuming our three-part series on palm biofuels, where in Part 1 we explored the USD billions involved and who is more or less committed to spending and paying, we have now turned to the shift to HVO-SAF, waste feedstock and about certification premia for Part 2.

  6. Whither PKE? PalmTrack’s analysis of palm kernel expeller (PKE) market shifts, which point to some struggle for this product.

Khor Reports’ PalmTrack is an independent research service that tracks palm tanker movements and reports trade of palm products (and shipments, upon request) for selected trade routes. It features a forward-looking market topic and sharp analysis every quarter, e.g. palm biofuels issues & opportunities for Jan–Mar 2022. Subscribe now!

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Sime Darby Implements Governance and Operational Changes

Sime Darby has announced in a press release “sweeping changes in governance and operations” in attempt to address forced labour allegations levelled against the company and USCBP findings that resolving the issue would require “significant financial investments” and restructures. Several reforms pledged by Sime Darby are of notable:

  • Reimbursement of recruitment fees. Sime Darby will reimburse some 15,078 foreign workers with an aggregate sum of RM38.6 million. A sinking fund of RM43.5 million to reimburse 19,565 workers will also be set aside. All reimbursements will be paid in lump sum, and current foreign workers will be informed of and receive their monies on 17 February 2021.

  • Ethical recruitment. Due diligence will be conducted regularly on recruitment agents to ensure that they are credible and fully licenced. Monitoring and training will be given to agents selected via open tender processes, and will undergo performance monitoring as well. Agents found to have violated Sime Darby’s zero recruitment fee policy will be prohibited from working with Sime Darby.

  • Structural changes. An ESG scorecard with “clear indicators” has been approved by the Board. A Social Welfare & Services department responsible for the implementation of policies concerning workers’ safety and welfare has also been established. Accordingly, 40 full time Site Safety & Sustainability Officers have been appointed to enforce these policies.

PalmTrack—Update for the Week

This week in PalmTrack, we covered:

  1. Neste's renewable ops & news: Neste Oyj of Finland has been a big mover in renewable transport fuels and has been the group to watch for quite some years now. It is worth looking at Neste’s most recent financial reporting for how its sourcing platform, expansions, and maintenance are evolving, as well as its slew of news headlines.

  2. Tankers from Lubuk Gaung Port: PalmTrack’s sample reports over 200k net tonnage of tanker arrivals from Lubuk Gaung origin, in the four weeks leading up to 23 Jan 2022. This zone is a prominent with big refineries, oleochemical facilities, and also includes waste oil processing. Key exporters include RGE-Apical-AAA, GAR-Sinarmas, Musim Mas, and others. Port-at-calls regions are notably Europe and Malaysia-Singapore.

  3. Tankers from Indonesia: Port calls for 10–23 Jan 2022 (14 days) count, c. 60 palm-related tankers, with sample net tonnage c. 360k (versus 14D to 9 Jan, c.70 tankers with sample net tonnage c.430k). These two weeks (10–23 Jan), the share of calls was higher for ASEAN (Malaysia, Singapore) and Americas ports. In the news, Indonesia requirement for export permits for palm oil. Indonesian used cooking oil (UCO) exporters are also concerned about new export restrictions that came into force on 24 Jan.

Khor Reports’ PalmTrack is an independent research service that tracks palm tanker movements and reports trade of palm products (and shipments, upon request) for selected trade routes. It features a forward-looking market topic and sharp analysis every quarter, e.g. palm biofuels issues & opportunities for Jan–Mar 2022. Subscribe now!

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Orangutans in a Social Media Storm

Plantation and Industries Minister Zuraida Kamaruddin made an admittedly bewildering statement during a dialogue session organised by the Malaysian Palm Oil Council (MPOC) on 5 Jan 2022: according to her “in Malaysia, if you see orangutans, orangutans will kill you first. Not we kill the orangutans first.” Conservation experts have understandably responded to the Minister’s, pointing out the comments were inaccurate.

The Ministry has since issued an official statement, claiming that the remarks were taken out of context and that it was said in jest.

Orangutan and deforestation issues have been the iconic question for palm oil. The Minister’s apparently flippant comments are a challenge for palm oil promotion intentions, but she points to the bigger (missed) context her call for a focus on orangutan issues and data. Positive and decisive actions on orangutans should be the next step from this inordinate social media storm.

Getting serious about orangutans. The info-data issues include: 

  1. Orangutan population data has always been a bit difficult as it is based surveys and back-casting. Newer research seems to estimate a lot more orangutans in the past, and the reduction is often proportionate with forest loss. Some industry observers are suspicious of this, and they also worry about misleading images including a popular photo of an orangutan being "attacked by heavy equipment" that keeps circulating on social media. In fact, we hear that the animal, named Hyundai, was being rescued by this equipment. 

  2. NGOs should be more public and transparent with their information. There are even some accusations online lack of accountability for corporate donations for orangutan efforts. Whether true or not, from first hand experience, we know it is hard to find public information about primate conservation projects and their costs. 

  3. Primates are complex and not cuddly creatures, and all wild animals need to be treated with respect to reduce conflict with humans. This is a theme of conservation efforts and forums that MPOC has sponsored. Our late 2019 review of MPOC’s wildlife projects are here, and the project list has not seen updates since although there is news of some new initiatives. 

There can and should be more public information about orangutans (and other endangered species) from all stakeholders. If we are to care about conservation, we have to get serious about the costs as well as how much area and animals we can cover. Transparency and accountability are key. 

For more context of the Malaysia social media storm: Malaysian netizens have been criticising Malaysian politicians for many months now. The wrong words or tone are picked up terribly fast on TikTok, Twitter, and other social media platforms. Over the years, there has been a struggle to promote a positive image for palm oil. A previous effort to put Prime Minister Mahathir as the face of Malaysian palm oil, with a recommendation to "take a spoon a day", came up against counter-currents in domestic opinion as an investigation of school children talking about sustainable palm oil caught many by surprise (and there will be ongoing efforts to ensure children do not “badmouth” palm oil). Mahathir himself was also caught up in political issues with India, triggering a call to boycott Malaysia palm oil.

For more, listen to the BFM podcast here following the Minister’s alleged joke: Zuraida, Orangutans and Palm Oil: Unpacking the Issues

PalmTrack Resumes!

PalmTrack resumes after a two-week break, bringing you more news and analysis on the palm products trade.

The last three months of 2021 saw some significant updates in the area including: (1) expectations of further port delays and congestions at major Chinese ports amid AIS data block and tighter pandemic-related regulations; and (2) our watchlist of nearly 50 palm-related vessels; and (3) vessel movements of selected trade origins and/or destinations, including tanker presence at the Dumai area, Indonesia-India tanker voyages, and tankers travelling from Malaysia, Papua New Guinea, and Thailand.

This year, we start off with a three-part series on the analysis of the issues and opportunities in palm biofuels. We have just published Part 1, which looks at the USD billions involved and who is more or less committed to spending and paying for it. We have also looked at the impact of the flash floods on palm oil supply in Indonesia and Malaysia. Subscribe to PalmTrack to read these posts!

Written by KHOR Yu Leng and Nadirah SHARIF of Khor Reports/Segi Enam Advisors, PalmTrack is a free, members-only space offering exclusive updates focusing on the palm products trade and presenting info-data driven insights with reference to granular trade statistics, near-time shipment/cargo information, and human-source market intelligence. Our coverage centres around Indonesia’s ports. Click the link below to subscribe!

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Mapping the Natural Rubber Value Chain in Malaysia

Happy New Year, everyone! It’s been a tumultuous end to 2021—the Philippines was ravaged by Typhoon Odette, Malaysia faced one of its worst floods in decades, several countries around the world were reporting and/or expecting a surge in Omicron infections.

The floods has triggered yet another wave of anger against the government, with frustrated Malaysians taking to social media to criticise officials for their incredibly slow response. Citizens and migrants are forced to help each another once again, this time under the #BanjirDarurat (Flood Emergency) campaign. Questions are also heating up on deforestation and the source of log jams in rural zones. As usual, we have the relevant social media data which we will explore in our next post under the Data and Analysis page.

For this post, a brief moment of happy news for us: in mid-December 2021, WWF released two reports exploring the sustainability issues surrounding the Malaysian natural rubber industry, both of which Segi Enam authored. What we found was that while the rubber supply chain is generally straightforward, the lack of transparency, traceability, and publicly available data makes it a difficult industry to evaluate when it comes to sustainability standards. Much of the root of the problem lies within the production system—for instance, smallholders dominate in this area and are typically not afforded the incentives to adopt more sustainable practices.

Segi Enam (WWF; 2021): Indicative map of rubber plantations in Malaysia based on the 2013-2014 dataset and maps retrieved from the Global Forest Watch (GFW) platform. Rubber dominant zones (dark green and mid-green) include: (1) Gua Musang, Kelantan; (2) near the Gerik, Perak-Southern Thai border; (3) Serting and Palong, Negeri Sembilan; (4) Lipis and Raub, Pahang; and (5) FELCRA/RISDA projects in Sarawak and estates in Sabah.

Read the full report here: Mapping the Natural Rubber Value Chain in Malaysia.

For the second report focusing specifically on the rubberwood sector: Addendum Report on Rubberwood

[Sample!] PalmTrack—Global Map of Key Palm Oil Company Vessels

PalmTrack continues with its exclusive update on palm tanker movements. Here’s a sample article of what we’ve been up to recently:

The above near real-time map shows estimates of tankers associated with major palm oil groups for 14 Dec 2021. Most appear to operate more frequently within the Southeast Asian region, with several deployed to key destinations including India, China, and Sri Lanka. We have a tanker watchlist of nearly 50 vessels of over 3 million net tonnage; many of these vessels appear in the map above, including the GS Future, Venus, and Melati Dua.

research@segi-enam.com | 14 Dec 2021

For online view only. Please to do not redistribute without our express permission. We offer subscription services for those who wish to do so.

Corporate Subscription (upcoming) offers more granular info-data details on product, trade and vessels mentioned in our reports.

Khor Reports’ PalmTrack is an independent research service that tracks palm tanker movements and reports trade of palm products (and shipments, upon request) for selected trade routes. It features a forward-looking market topic and sharp analysis every quarter, e.g. palm biofuels issues & opportunities for Jan–Mar 2022. Subscribe now!

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PalmTrack—A December 2021 Recap

As PalmTrack enters well into its second month, we continue to offer readers exclusive updates on the palm products trade. Here are a few snippets of the news we covered this past month:

We have a tanker watchlist of nearly 50 vessels with over 30 million net tonnes associated with key palm oil companies. Subscribe to PalmTrack and head on over to our post to see a near real-time map showing the estimated positions of some of these tankers.

As 2021 draws to a close, there are several recent key news and chatter surrounding the palm oil trade. Read our post for some of our market observations about food safety, sustainability, and Thailand from our interviews with experts.

Following reports on Indian refiners reducing their palm oil purchases and making the switch to sunflower and soybean oils, we have collected data on palm-related tankers sailing from Indonesia to India. Read our post for an analysis of this sample of data.

Other news:

Khor Reports’ PalmTrack is an independent research service that tracks palm tanker movements and reports trade of palm products (and shipments, upon request) for selected trade routes. It features a forward-looking market topic and sharp analysis every quarter, e.g. palm biofuels issues & opportunities for Jan–Mar 2022. Subscribe now!

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[Sample!] PalmTrack—Indonesia-India Vessel Movement

To give a feel of what has been going on on PalmTrack, here’s a sample article on Indonesia-India vessel movements:

Indian refiners are reportedly lowering their palm oil purchases, reducing their Nov 2021–Jan 2022 shipments, and making a switch towards sunflower and soybean oil imports instead. The steep rally in palm oil price has reduced its discount, giving way to rival oils.

India imports 13-15 million tonnes of palm oil a year, i.e. over 1 million tonnes a month. We had a preliminary look at tanker movements from Indonesia to India based on ship published origins and destinations (which is usually incomplete because not all vessels make full reports). This sample of tankers, covering an estimated 10% of total India monthly imports, largely originates from Riau and South Kalimantan and goes to Gujarat and Kerala. Top destination ports were Kandla (Gujarat), Vizhinjam, Cochin (Kerala), Haldia (West Bengal), and Mangalore (Karnataka).

Based on trade intelligence, we know the sample of tankers have been associated with major palm trader-processors and cargoes (YTD 2021); see text bubbles for key names. To review actual shippers and cargo, other datasets* can be reviewed.

We have further details for both arrival and departures by port/province/region, vessel tonnage, and granular information to jetties.

*It would also be useful to review customs info-data (not included in this summary). Please reach out to us at research@segi-enam.com.

research@segi-enam.com | 3 Dec 2021

For online view only. Please to do not redistribute without our express permission. We offer subscription services for those who wish to do so.

Corporate Subscription (upcoming) offers more granular info-data details on product, trade and vessels mentioned in our reports.

Khor Reports’ PalmTrack is an independent research service that tracks palm tanker movements and reports trade of palm products (and shipments, upon request) for selected trade routes. It features a forward-looking market topic and sharp analysis every quarter, e.g. palm biofuels issues & opportunities for Jan–Mar 2022. Subscribe now!

$380.00
Every year
$38.00
Every month