• 
• 

Published on March 24, 2008

Most of the methyl ester or biodiesel B100 output is supplied to PTT Chemical's parent company, PTT, said Thai Oleochemicals president Kongkrapan Intarajang. A quarter of the output is supplied to other refineries.

The company has struck contracts of one to five years with at least 10 palm-oil factories to ensure a constant supply of raw material for biodiesel production. It has experienced no shortage of raw-material supply so far, as suppliers are happy with the prices and the company is happy with the constant supply.

However, the raw-material cost is now double the company's earlier estimate, although the higher cost should not affect its profitability as the B100 price is also based on market prices which move in line with crude palm-oil prices, Kongkrapan said.

"Our penetration into B100 production should not affect other producers, as our capacity is only 200,000 tonnes per annum against demand of 330,000 tonnes. Our main focus is still on the production of oleochemical products, which brings higher margins," he said.

In May, Thai Oleochemicals will commence the commercial production of fatty alcohol, a basic ingredient in the manufacture of many personal-hygiene products, with a capacity of 100,000 tonnes a year. Two-thirds of the output will go to PTT Chemical and partners.

Fatty-alcohol prices have risen in line with palm-oil prices, from US$1,100 (Bt34,400) per tonne in 2007 to about $1,600 early this year. However, the raw material - crude palm kernel oil (CPKO) - is also more expensive at $1,200 per tonne now from about $900 last year.

Kongkrapan said that like crude palm oil, the supply of CPKO was tight. Domestic production capacity of CPKO now stands at 120,000 tonnes per annum. While the current demand is about 50,000 tonnes, Thai Oleochemicals would need 130,000 tonnes for fatty-alcohol production. This would lead to a supply shortage, so the company has asked for permission to import CPKO. This has yet to be approved.

"It may be necessary to allow imports. There could be measures to monitor the utilisation of the imports if the government fears an indirect impact on the economy from them," he said.

The B100 and fatty-alcohol projects cost $170 million and are expected to generate Bt8 billion for the company this year.

Kongkrapan said Thailand imported 46,722 tonnes of fatty alcohol and glycerine worth Bt3.3 billion annually. Thai Oleochemicals production would reduce the imports and lead to the development of new industrial products. The company is studying plans to expand into related industries and intends to finalise the investment strategy next year.

Yesterday it announced plans to rebrand polymer products under the name InnoPlus in order to enlarge its customer base domestically and internationally.

Energy Reporters

The Nation