MUMBAI: India’s palm oil imports surged 20.6 percent in September from a month ago, rising for the first time in four months, as a recovery in the rupee encouraged refiners to buy more for the peak festival season.
India, the world’s leading buyer of palm oils, imported 644,386 tonnes in September, the Solvent Extractors’ Association (SEA) said in a statement on Monday.
That included imports 167,601 tonnes of refined palm oil. SEA warned of a crisis brewing in the refining industry due to the increasing trend toward buying refined oils from abroad.
Importers were helped by the rupee’s rally in September, when it gained 5 percent to snap a four-month losing streak.
Palm oil accounts for about 80 percent of India’s total cooking oil imports. Most of it comes from Malaysia and Indonesia. India relies on imports for about 60 percent of its annual vegetable oil demand of 17-18 million tonnes.
Total vegetable oil imports during the month jumped 14 percent from last month to 863,917 tonnes, the SEA said.
India’s demand for edible oils usually increases in the December quarter due to Hindu festivals like Dussehra and Diwali, which often with family gatherings for feasts.
A Reuters survey had forecast average vegetable oil imports at 881,000 tonnes in September, including 614,000 tonnes of palm oil.
India’s vegetable oil imports in October are likely to be 800,000 to 900,000 tonnes, lower than 1 million tonnes during the same period a year ago, as soybean supplies started from the new season crop, said B.V. Mehta, executive director of the SEA.
“Soybean supplies have already started due to early sowing. Oil mills are crushing new season crop and that will limit imports in October,” he said.
Soybean is the country’s main summer-sown oilseed crop and supplies have started in key growing areas, although recently heavy rains disrupted harvesting.
India’s vegetable oil imports in the first 11 months of the marketing year ending on Oct. 31 stood at 9.66 million tonnes, up 5.5 percent from the year before.
Refined palm oil (RBD) imports in April to September more than doubled to 1.45 million tonnes, as the world’s biggest palm oil exporter Indonesia structured taxes to favour exports of the refined product over crude to support its domestic refiners.
Rising imports of refined palm oil are “leading to crisis in the domestic refining sector”, said the SEA. It wants the government to raise duties on refined products to protect the local refining industry.
“More than half of refining capacity is idle in India,” said an official with a leading refiner based in central Madhya Pradesh state. “Indian refiners can’t survive if the duty structure is not altered.”
In September, the difference between the landed price of refined palm oil and crude palm oil in India was $10 per tonne, compared with $36 during the same period a year ago.
The food ministry has suggested the import duty on refined palm oil should go up to at least 10 percent from 7.5 percent, but it needs support from other ministries.
The finance ministry favoured an increase earlier in the year when it was desperate to cut imports and rein in the current account deficit. India imports about $10 billion of edible oils a year — about 2 percent of total import costs.
But the rupee’s fall to a record low in August helped to stem the tide of imports and encouraged exports.- Reuters
Source : The Star