AmWatch - Plantation Sector : Newsflow for week 7 – 11 July NEUTRAL, 14 Jul 2014

SECTOR FOCUS OF THE DAY

Plantation Sector : Newsflow for week 7 – 11 July             NEUTRAL

Last week, India scrapped the 7.5% import duty on fatty acids, crude and refined palm stearin used in the manufacturing of soaps and oleochemicals. According to the Solvent Extractors Association of India, the country imports about 200,000 tonnes of such products each year. We believe that the abolishment of the duty would encourage the oleochemical industry in India to import instead of buying the feedstock from local refiners. Palm kernel oil and palm stearin are the main raw materials used to produce oleochemicals. We reckon that the action of the new India Government would intensify lobbying efforts by the Indian refiners as the scrapping of the import duty is expected to affect the competitiveness of the Indian refiners. Currently, they are lobbying for an increase in the import duty for refined palm oil, which stands at 10%.      

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