A Bold Biodiesel Move Reshaping Palm Oil and Oleochemicals

Indonesia officially rolled out its B40 biodiesel mandate on January 1, 2025, requiring 40% crude palm oil (CPO) blending into diesel, an increase from the previous 35%. This policy is one of the most ambitious globally, aimed at cutting diesel imports, improving energy security, and strengthening the domestic palm oil sector. Implementing B40 is expected to consume 15.6 million kiloliters of CPO, redirecting nearly 2 million tons away from exports. While this strengthens biodiesel production, it also tightens supplies for cooking oil and oleochemical feedstocks such as glycerine.

For businesses navigating this shift, securing reliable partners is critical. As one industry leader put it, “Supply certainty is just as important as price stability.” Companies like Tradeasia International, with a strong presence in palm oil and oleochemicals, position themselves as key enablers in bridging producers and global buyers. Their integrated sourcing network ensures that industries depending on palm derivatives—whether for energy, food, or chemicals—can adapt to shifting trade flows without disruption.

Market Pressures, Price Movements, and the Role of R&D

The rise in biodiesel output inevitably boosts glycerine production, since glycerine is a major byproduct of biodiesel. This has expanded global supply, placing downward pressure on refined glycerine prices, which in 2025 range between USD 800–1,000 per ton, reflecting a 10–15% drop compared to 2023. Meanwhile, palm oil prices remain relatively firm, averaging USD 800–1,100 per ton, supported by resilient export demand and limited production growth.

On the trade front, China and India account for more than 50% of Indonesia’s refined glycerine exports, largely for pharmaceuticals, cosmetics, and food. Demand in these sectors continues to grow at a 5–7% CAGR, underlining Asia’s role as a demand anchor. However, the oversupply challenge makes innovation essential. This is where R&D investments come into play. Indonesian and regional oleochemical players are upgrading crude glycerine into higher-value pharmaceutical and food-grade products using advanced refining techniques such as membrane separation, ion exchange resins, and enzymatic purification.

Beyond existing uses, research is unlocking new applications in bioplastics, renewable chemicals, and personal care, providing fresh demand avenues and reducing price volatility risks. By focusing on value-added transformations, the industry is building resilience against the cyclical nature of commodity markets.

In summary, Indonesia’s B40 mandate is reshaping both palm oil allocation and glycerine dynamics. While refined glycerine prices soften under oversupply pressures, technology-driven innovation and strategic trade partnerships offer a pathway to balance. With prices hovering around USD 800–1,000 per ton for glycerine and near USD 1,000 per ton for palm oil, 2025 underscores the importance of aligning policy, markets, and innovation to secure sustainable growth in the biodiesel–oleochemical nexus.

 

Sources:

  1. Indonesia biodiesel B40 mandate and its palm oil diversion impact - https://www.thejakartapost.com/opinion/2025/01/17/analysis-ri-to-implement-b40-biodiesel-mandate-in-2025.html

  2. Oleochemicals Asia on glycerine markets, R&D and value addition - https://www.oleochemicalsasia.com/

  3. Market reports and glycerine price trends including Southeast Asia supply challenges -https://www.chemanalyst.com/NewsAndDeals/NewsDetails/glycerine-prices-surge-across-southeast-asia-amid-feedstock-inflation-and-export-38751