The combined volume of palm oil imports to Uzbekistan and Kazakhstan is rather small, at less than 10,000 MT. At the same time, the import of special fats is actively growing. Russia is taking a leading position due to its logistical advantages but nevertheless, Malaysian importers have a good chance of winning the competition in these new markets.
Over the past three years, the export of palm oil from Russia to Kazakhstan has been steadily decreasing from 32,000 MT in 2018 to 8,000 MT in 2020. Uzbekistan at that time was not a major importer of palm oil from Russia and as can be seen from the table below, Kazakhstan dominated palm oil imports from Russia.
Belarus, another major importer of palm oil from Russia, also reduced its imports from 4,600 MT in 2018 to 1,800 MT in 2020 but this does not mean that real imports have decreased. It should be noted that over the same period there has been a sharp increase in the imports of other items. In particular, Russia has significantly increased export to CAR countries (Kazakhstan and Uzbekistan) following by HS Codes:
- · 1516: Fats and oils, partly or wholly hydrogenated, interesterified;
- · 1517: Margarines,
- · 1518: Animal or vegetable fats and oils and their fractions .
According to the data of Russian Customs, the export of Palm oil based fats from Russia has increased by 38% over the past three years, exceeding 350,000 MT in 2020. In the first five months of this year, exports have already reached 140,000tonnes. As shown in the table above, items with HS Code 1517: Margarines became the largest export item from Russia to the CAR countries.
Despite the fact that
Kazakhstan and Uzbekistan significantly reduced the import of palm oil by HS
Code 1511, import of special-purpose fats increased significantly.
Over the past three years Kazakhstan increased the import of specialty fats by one and a half times. A similar situation is observed in Uzbekistan as the country increased imports under these items by 46%.
All in all, from 2018-2020 Russia increased its export of specialty fats by 38%. AS for Uzbekistan, over the years from 2028-2020 Malaysia has decreased exports of items bearing HS code 1516 from 34,500 MT in 2017 to 17,700 MT in 2020. At the same time Russia increased its export from 2,000 MT in 2017 to 14,500 MT in 2020. The same trend is also registered by items with HS code 1517 – Russia substantially increased its export to Uzbekistan from 23,700 MT in 2017 to 30,500 MT in 2020.
Summing up, it should be noted that both countries are actively increasing imports of special-purpose fats, the main component of which is palm oil. Over the past few years from 2018 to 2020 overall imports of special-purpose fats has increased by 48% exceeding 100,000 MT.
The main buyers are Kazakhstan and Uzbekistan and both countries have significantly increased their imports of fats from Russia over the last three years (2018-2020). Russian suppliers do not need to declare palm oil in strict accordance with the HS codes, since the CAR countries exempt Russia from import duties. Russian exporters benefit from no import duty under the local custom tariffs.
The main reason why Kazakhstan and Uzbekistan have increased their imports of specialty fats from the Russian Federation is in the amendments to the customs duties of the EAC countries. These amendments are active from September 2017 which according to this, 0% customs duties were introduced for Russian suppliers on the territory of these countries. Meanwhile, suppliers from the South-East Asia region face a surcharge. of between USD 100 per ton for HS codes 1511 and 1516; and USD 150 per ton for HS code 1517.
One should also keep in mind the rapidly rising freight prices and unstable transit through China while at the same time, the cost of railway transportation from Russia has not increased much, and the delivery time is only 10-14 days. Under such conditions, more and more customers are switching to work only with Russian suppliers who are active in the market. This leads to the fact that the difference in prices between Russia and Malaysia reaches USD 150 per ton.
Unofficially China has closed all transit of packed palm oil from Malaysia to Uzbekistan and Kazakhstan since May`21. Cargoes get held up, and no one clearly knows when the cargoes will be released. There is no exact date when the Chinese Government will allow transit again, because now the Chinese railway is fully occupied by the export to EU countries. Some say that oils and fats for transit to Kazakhstan and Uzbekistan will be unblocked only in December 2021. But no official statement was released until now.
The situation with the bookings for the transit through Vladivostok port (Russia) is not easy either. All in all, these factors provide a beneficial situation to import of palm based products from Russia to the CAR countries which will see a change in the market dynamics after the pandemic is contained.
Prepared by Aleksey Udovenko
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