Jakarta – The palm oil industry has continually seen a robust growth, which is particularly supported by the higher consumption of oleo-chemical products amid the economic recession in Indonesia. It is seen as a result of the public obligation to comply with the health protocol to prevent the spread of the Covid-19 pandemic.

The Indonesian Palm Oil Association (GAPKI) Secretary General Kanya Lakshmi Sidarta said recently that they have not yet got data on the rising demand for the downstream products, but along with the ongoing Covid-19 pandemic the oleo-chemical consumption has been continually increasing.

The oleo-chemical industry processes the crude palm oil (CPO) into midstream products, such as fatty acid, glycerol, and methyl ester. The midstream products are the raw materials to produce cleaning and personal care products, such as soap, shampoo, and hand sanitizers.

“Before this pandemic, people have only washed their hands twice or three times a day, but now they have to wash their hands more often. They also have to use hand-sanitizers as part of protocol to prevent being infected by Covid-19. That has caused the demand for oleo-chemical products increasing,” she told Bisnis last Thursday.

Based on Gapki data, the consumption of oleo-chemicals in July 2020 reached the highest level compared to the consumption of food and biodiesel products. The oleo-chemical demand rose by 45 percent, biodiesel by 27 percent, while the lowest demand was seen by the food products at only 15 percent.

In terms of volume, the consumption of oleo-chemicals increased by 6,000 tons to 148,000 tons, the food products increased by 4,000 ton to 642,000 tons, while the consumption of biodiesel increased by 87,000 tons to 638,000 tons in July 2020.

Compared with the previous month, the total local consumption increased by 97,000 tons to 1.42 million tons. Compared to the same period last year (YoY), the total domestic consumption in July this year increased by 3.0 percent to 10.09 million tons.

Laksmi presumed that the sluggish growth of the hotels, restaurants and caterings (horeca) sub-sector and the paralysis of tourism sector had indicated the low demand for food products. On biodiesel, the total assignment of 9.0 million kiloliters is projected to be only realized at around 8.0 million kiloliters this year.

“Now, the culinary tour has dropped, while the public has changed their lifestyle, as has been indicated by among others less use of public transportation than before,” said Laksmi.

Based on GAPKI data, CPO production in July reached 3.84 million tons or 6.2 percent lower than the production during the previous month and 8.2 percent lower than the same period last year (YoY).

With the production, the final stock in July 2020 amounted to 3.61 million tons or 253 percent from July consumption.

“The total production this year is expected to be relatively stagnant or slightly lower than that of last year as the Covid-19 pandemic has not significantly changed the production activities, except the production cost will be higher as a result of the implementation of the health protocol,” Laksmi said.

The government has maintained the strict implementation of health protocol amid the outbreak of Covid-19 pandemic and the general public are still waiting for the availability of Covid-19 vaccines. (*)

Source: Bisnis.com | Image via GAPKI