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| Biodiesel looking up as crude prices rise |
| Ajay Modi / New Delhi Jun 24, 2009, 00:52 IST |
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Following the doubling of the crude oil prices from a low of $32.40 barrel in December last year, biodiesel prices too have started looking up globally. Since April, biodiesel prices in Europe have jumped over 72 per cent on a demand revival. Indian producers are cashing in on this.
“Biodiesel prices were ruling around $550 a tonne in April and has now surged to $950 a tonne. Prices are firm,” said D S Bhaskar, managing director of Kakinada-based plant of Naturol Bioenergy, which exports about 8,000 tonnes every month to European countries. The country’s first biodiesel plant has a capacity to produce 100,000 tonnes biodiesel annually.
From its peak of $142 a barrel in July last year, crude oil prices touched a low of $32.40 in December. However, prices have been firming up since May on improved economic sentiments and anticipation of demand revival. Presently, it is ruling above $70 a barrel.
Cleancities Biodiesel, another Hyderabad-based company, which has set up the country’s largest biodiesel plant with a 250,000-tonne capacity in Visakhapatnam, earlier this month exported its first consignment. “We shipped close to 10,000 tonnes to Spain last week. Last year was bad as crude oil prices crashed. Now, the market is looking up and demand is good in Europe and the US. We expect to export regularly now,” said Srinivas Prasad Moturi, chairman and CEO.
The Union Cabinet approved the National Policy on Bio-fuel on September 12 last year which aimed at raising the level of blending of biofuels with petrol and diesel to 20 per cent by 2017.
However, presently only blending of ethanol (at 5 per cent) with petrol is being implemented and there is no blending of biodiesel.
Therefore, domestic plants are catering to the international market.
However, experts in the food sector have a word of caution on the rising crude prices, which could again lead to the diversion of corn and edible oil. This would exert upward pressure on the food prices.
“If crude crosses the $75 a barrel mark, it could disturb the food scenario by an increase in diversion of oilseeds and cereals to biofuels,” said Madan Sabnavis, chief economist at the National Commodity and Derivatives Exchange.
Ashok Gulati, the Asia director of the International Food Policy Research Institute expects the annual consumption of corn for fuel in the US to go up to 100 million tonnes from the present 80 million tonnes if the surge in crude price is sustained.
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