“This is mainly coming from the conversion of new refinery capacity (especially in the US) as well as the expansion of existing capacity (Neste). The growth of renewable diesel production is also pushed by the growing demand in the US market and a potential new demand from other countries such as Canada,” the analysts write in a July 16 research note.
UOB Kay Hian is keeping its “market weight” rating for the regional plantation sector as crude palm oil (CPO) prices are expected to remain weak, amidst the backdrop of a growing shift towards renewable diesel.
Analysts Leow Huey Chuen and Jacquelyn Yow highlight that the global trade for conventional palm-oil-based biodiesel is expected to decline, while a huge growth in the global trade for renewable diesel, which uses vegoil, is expected to jump.
