As the global financial crisis took its toll, China's economy slowed to a seven-year low of nine per cent in 2008 from 13 per cent in 2007, breaking the country’s five-year streak of double-digit expansion. Weakening exports have led to some private sector economists forecasting a growth of as low as 5.6 per cent this year. Growth plunged to 6.8 per cent in the final quarter of 2008.

While analysts believe that a 2009 growth rate of 6.5 per cent or 7 per cent (meagre by Chinese standard) is very likely, Premier Wen Jiabao told the Session of the 11th National People's Congress (NPC) on March 5 that strategic policies (see Chart 1) would bring the country’s economic growth to an achievable 8 per cent in 2009.

With a weakening economy curbing demand in the world's largest consumer of oils and fats, the key question is: what can we expect from the Chinese market during the year ahead?

OILS AND FATS MARKET IN 2008The gap between supply and demand that China’s vegetable oil market has seen since 1985 has been widening gradually since the later part of 1993, which is why imported oilseeds and edible oils are vital to the Chinese vegetable oil supply. Customs data show that China imported 8.08 million MT of vegetable oils in 2008, even if 2.59 per cent lower than 2007. The decline in 2007 was attributed largely to plummeting edible oil prices and the unsettleing situation in imported oils and domestic prices. Increasing imports have made the Chinese market more vulnerable to international market sentiments such as skyrocketing oil prices and the global inflation, which have put greater pressure on the import and domestic prices of oils and fats in the country.

Domestic edible oil consumption has seen rapid development, thanks to China’s robust economic growth, rapid expansion of the food sector and a better

standard of living for the rural population. Total consumption of edible oils in 2008/09 is estimated at 24.32 million MT, a far cry from 10 million MT of the 1990s (Chart 2). It cannot be denied that the large population base and rising income have brought about rapid change in the pattern of vegetable oil consumption in China.

The rapid development and lucrative profit margin in the edible oil sector also saw the growth of packed vegetable oils for the retail market. At present, the three big brands, i.e. Arawana, Luhua and Fulinmeng, dominate for more than over 70 per cent of China’s edible oil retail market. Now, with rapid economic growth and improving lifestyles, the industry is targeting high-end consumers who are becoming more quality-conscious. Sunflower and corn oils packed for the retail market have gained the popularity with the locals who consider them high quality cooking oils. Higher olive oil imports also reflect their demand for quality. Customs statistics show that China started importing a mere 150 MT of olive oil in

TM

MALAYSIAN PALM OIL COUNCIL KKDN PP 14669/05/2009 VOL: 3 2009

DIRECTOR

Wira Adam wira@mpoc.org.my

MANAGER

Sum Kum Mooi sum@mpoc.org.my

Muhammad Kharibi Zainal Ariffin kharibi@mpoc.org.my

MARKET ANALYSTS

Asia Pacific Desmond Ng Kok Hooi

desmond@mpoc.org.my

South Asia Fatimah Zaharah Md Nan

fatimah@mpoc.org.my

Middle-East Norhaznita Husin

haznita@mpoc.org.my

Africa Lim Teck Chaii

lim@mpoc.org.my

Europe Sum Kum Mooi

sum@mpoc.org.my

Americas Fatimah Zaharah Md Nan

fatimah@mpoc.org.my

For more information, please contact Tel : 603 - 7806 4097Fax: 603 - 7806 2272

MARKETING & MARKET DEVELOPMENT DIVISION

MPOC FORTUNE

Continued on page 9

Power of Chinese DemandIn the wake of the bumpy global ride, we can

expect robust growth in palm oil imports

Premier Wan Jiabao said in his government work report to the parliament’s annual session on March 5, 2009

China major targets for 2009GDP will grow by about 8%

Economic structure wil l further improve

Urban employment wil l increase by more than 9 mil l ion persons

Urban registered unemployment rate wil l be held under 4.6%

Urban and rural incomes wil l grow steadily

Rise in the CPI wil l be around 4%

Balance of payments wil l continue to improve

Chart 1: China Major Targets for 2009

Source: Xinhua/Ma Yen

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16 March 2009. The price of Crude Palm Oil futures (FCPO) went sideways since my last commentary on Feb 13. I expected the price to pull back to the support level of RM1,800 per metric tonne before going higher. The price did pull back, but to as low as RM1,828. Then it went to a high of RM2,026 before settling at RM1,902 on March 16. I expected price to go RM2,260 in the near term, especially if it breaks above RM2,056, but resistance seems to be strong around RM2,000. The question now is, can the price break this three-month-old resistance?

At a major palm oil conference in Kuala Lumpur recently, the well-known London-based palm oil analyst Dorab Mistry forecast that CPO prices would fall to RM1,500/MT by the second half of this year. For the short-term he forecasts prices to rise to RM2,100 because of tightening palm oil stocks in Malaysia. Mistry also said the global economic slowdown that will result in an overall decline in demand will also weigh on prices. This year, he added, traders will have to pay attention to demand, rather than supply.

However, other analysts say the price may remain bullish throughout the year. The supply of soybean is expected to decline and this should be offset by higher palm oil exports. The price gap between palm and soybean oils is narrowing and there are traders who argue that if freight costs are taken into account, palm oil will continue to be the cheaper alternative in most Asian

markets. The waiver of duty for CPO imports will likely increase the inflow of crude palm oil to an all-time high.

New York-based vice-president of Prudential Bache Commodities Anne Frick says that prices are likely to move between RM1,700 and RM2,300 for the rest of the year while Kuala Lumpur-based analyst M.R. Chandran believes that prices could go up to RM2,200 by June.

The latest CPO export estimates for Malaysia are positive. According to cargo surveyor Intertek Agricultural Services, exports rose 16 per cent during the March 1-15 period to 591,567 MT. Another surveyor, SGS, said the exports rose 19.8 per cent to 592,071 MT. Fundamentally, there is a high chance of the price of FCPO increasing because of higher demand in Asia as the price of soybean oil is still relatively higher in the near term.

The uptrend is very well intact because the price is above both short- and long-term 30- and 90-day moving

averages. The longer term 90-day average is at RM1,726. However, the strong momentum last month has started to weaken. The ADX indicator has started to decline and the RSI indicator swings stay flat. Average trading volume for FCPO remains the same as last month.

The price action for the past three months has formed a chart pattern called “ascending triangle”. The triangle indicates that price is in a correction. The correction has an upward bias because of rising support levels (The term “ascending” refers to rising support levels). When the close price breaks above RM 2,000, it confirms the continuation of the up trend, with a price objective of RM2,260, same as the target price I set last month.

The momentum would start to get strong if price breaks and closes above RM2,000 and this could push the price of FCPO to RM2,260. If price can’t break above this level, expect palm oil to trade between RM1,730 and RM2,000 this month.

MARKETWatch

FCPO futures daily chart as at 16 March 2009. Charted by Benny Lee using NextView Advisor Professional

Benny Lee is a private trader, trainer and sought-after speaker in the financial market. He is the Chief Market Strategist for NextView Group. NextView Group is a group of companies in the Asian region that provides a leading real-time investment tool for both professional and retail investors. NextView is also a leading Investor Education training provider.

For more information, log on to www.nextview.com.

The above analysis and commentary is based on the writer’s personal findings about the price of crude palm oil, using technical analysis. It should not be construed as any form of investment advice and the writer shall not be held responsible for any decision made based on this article.

W

MPOC FORTUNE •  3

CPO pricewaiting fora break out

by Benny LeeChief Market Strategist of

NextView Group.

For more information, please contact :

ICB Global Management Sdn BhdNo. 3, Jalan Sri Hartamas 7, Taman Sri Hartamas, 50480 Kuala Lumpur, Malaysia. Tel: +603 6201 6051 Fax: +603 6201 6053

Since palm oil arrived on the cooking oil scene in the Philippines, the demand for it in the thousand-island nation has seen tremendous growth, especially when it was so much cheaper than coconut oil. Due largely to the slowdown in copra production in the Philippines, the huge jump in coconut oil price increased demand for lauric oils on the face of a strong economy and demand for specialty and personal healthcare products.

As a result, 2004 and 2005 witnessed the highest growth in palm oil import by Philippines, growing by 193 per cent and 112 per cent respectively, with more brands of palm-based cooking oil, including some with a minimum blend of coconut oil, hitting the shelves. This also testifies to the price-sensitivity of Filipino consumers, with most of them preferring cheaper vegetable oils for daily use.

The consumption of palm oil outpaced total oils and fats consumption in the country, which only grew at 3.1 per cent a year during 2004 and 2005. However, the subsequent years saw palm oil consumption slow moderately, despite the total demand for oils and fats continuing to grow at 7.9, 9.4 and 2.1 per cent respectively between 2006 and 2008. This led to a decline in palm oil’s share of oils and fats consumption in the country in the past three years.

PRICE DIFFERENCE FROM COCONUT OIL REMAINS SIGNIFICANTThe stagnant consumption of palm oil in the Philippines came as a surprise as the country’s consumption of oils and fats was seeing strong growth. At the same time, palm oil was a lot cheaper than coconut oil, averaging US$264 per MT cheaper, CIF Rotterdam, in 2008.

Sensibly, palm oil should be the first option for Filipino consumers. However, the purchasing power of the people were greatly affected when palm oil prices shot through the roof. Between 2006 and 2008, palm oil prices (CPO, CIF Rotterdam) jumped from an average of US$422/MT (RM1,533) in 2005 to US$478, US$780 and US$983 (RM3,571) respectively. With GDP growing at an average of 5.7 per cent during this period, the oil palm price was way beyond what consumers could afford.

What contributed to this increase in oils and fats consumption? Between 2006 and 2008, coconut oil consumption increased by 21, 15 and 13 per cent respectively in the Philippines when the price in 2008 (CIF, Rotterdam) hiked to an average of US$1,247/MT. Was the price manipulated in the international market for the domestic price to be very low? The answer is no.

ADDITIONAL CONSUMPTION OF COCONUT OIL WENT TO BIODIESELFor those who follow closely the oils and fats market in the Philippines, the

additional demand for coconut oil was actually created by the mandatory blending of coco-methyl ester (CME) in diesel, with coconut oil being the chief raw material for this green fuel. Under the Philippines Bio-Fuels Act, the government mandated the blending of one per cent CME in diesel used for the transportation sector from May 2007. With this, it was estimated that coconut oil demand by the biodiesel sector amounted to 47,000 MT (pro-rated to seven months at 70,000 MT as the mandate began in May 2007) and 74,000 MT in 2007 and 2008.

Consumption for food processing, as cooking oil and in the oleochemical industries did not see huge jump in the last few years. Instead, the demand for oils and fats declined in 2008, mainly because of high vegetable oil prices and the continuously falling production of coconut oil in the country the same year.

MPOC FORTUNE •  5MPOC FORTUNE •  5

MARKETInsightsIns g

1999 2000 2001 2002 2003 2004 2005 2006 2007 20080.0%5.0%

10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%

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Gloomy DaysThat's the outlook for vegetable oil imports this year by the Philippines

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6 •  MPOC FORTUNE

PRICE DRIVEN TO HUGE PREMIUM AGAINST PALM KERNEL OILBeing the world’s main exporter of coconut oil, demand for the oil by the biodiesel industry has led to reducing the flow for export. On the other hand, palm kernel oil, which has similar function with coconut oil, saw tremendous production growth in the recent years, thanks to the fast expanding oil palm acreage, especially in Indonesia. Although both vegetable oils are high in lauric acid, the higher content of shorter fatty acid chain in coconut oil also led to higher demand for this vegetable oil in selective applications. Hence, the stagnating growth of coconut oil production globally against the ever-expanding palm kernel oil will keep prices of coconut oil at a premium against palm kernel oil, and obviously palm oil as well. Then how will palm oil fare this year? Let us take a look at the other developments.

Prices of vegetable oils around the world dropped dramatically over the past eight months, with both palm oil and coconut oil prices in January this year standing at 57 and 59 per cent of the 2008 average prices. This has made vegetable oils affordable again among Filipinos and with palm oil being US$172/MT cheaper than coconut oil, it is sure be attractive for more buyers, especially with the global economic downturn forcing producers and manufacturers to minimize costs.

Last year, the Philippine government reinstated the coconut fertiliser programme, under which copra production this year is projected to increase by 11 per cent. Increased copra production means that coconut oil in the market will also surge to an estimated 1.34 million MT, or an additional 133,000 MT of coconut oil available in 2009. This amount seems to be more than enough to cater for the biodiesel industry and

domestic demands for conventional applications.

However, with the successful implementation of mandatory blending of one per cent CME in diesel since 2007, the government of the Philippines has proceeded with increasing the blend to two per cent this year. It will require some 157,900 MT of coconut oil to achieve the two per cent blend – or an additional 83,600 MT of coconut for biodiesel this year – leaving 49,400 MT for the local market and for export. With the forecast increase of coconut oil production in other countries to 53,000 MT for 2009, the extra amount of coconut oil available for the global trade is estimated to be 102,400 MT. This could reduce the tight supply of the oil and ease prices during the year, even causing it to be cheaper than palm oil. Nevertheless, these are very much subject to the success rate of the fertiliser programme.

On the local front, the country’s GDP is expected to grow by 3.7 to 4.4 per cent

this year. Positive growth of GDP in the past correlated to the growth in oils and fats consumption, and levels were exceptional in 2000 and 2008, excluding consumption by the biodiesel sector when GDP grew 4.4 per cent, but demand declined marginally by 0.1 and 1.6 per cent respectively.

Economists around the world reckon that the financial crisis that exploded in 2007 is growing bigger and most countries may not recover until early 2010. The outlook

for Philippines’s export commodities, including coconut oil, is rather gloomy this year. This situation will most likely lead to additional supply of coconut oil domestically and stiffer competition in the Philippine oils and fats market this year. The latest figures released by the United Coconut Associations of the Philippines record a slow pick-up, with the volume sliding by 80 per cent from the January 2008 volume. The export of coconut oil is expected to decline by 2,000 MT against last year’s figure. Therefore, brace for a challenging time for palm oil this year! Desmond Ng

Gloomy DaysThat's the outlook for vegetable oil imports this year by the Philippines

Philippines: Production and Consumption of Coconut Oil (’000 MT)

2005 2006 2007 2008

Production (coconut oil) 1,357.6 1,352.6 1,174.0 1,206.0

Consumption (coconut oil) 225.5 272.1 312.8 353.0

- of which, Biodiesel 0 0 47.0 74.3

Actual consumption of coconut oil 225.5 272.1 265.8 278.1in conventional applications

Total Oils & Fats Consumed 651.7 703.0 722.0 710.7(excluding biodiesel)

From: Oil World & Other Sources

Global Coconut Oil Production(’000 MT)

2007 2008 2009F

Indonesia 958 936 981

Philippines 1,175 1,206 1,340

Other 981 988 996

Total 3,114 3,130 3,317

Source: Oil World & MPOC estimates

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MARKETInsightsIns g

MPOC FORTUNE •  7

The European Union has imposed anti-dumping and anti-subsidy duties on biodiesel imported from the United States. The Official Journal of the European Union (No 193/2009 and No 194/2009), reports that US firms exporting biodiesel into the EU will have to pay additional anti-dumping tariffs of up to 29 per cent and anti-subsidy duties of between 29 and 41 per cent for six months, until the EU completes its trade investigation into biofuel the US exports to the region.

Prior to this, biodiesel from US that is mixed with mineral diesel fuel was entitled to a biodiesel mixture tax credit, depending on the proportion of biodiesel contained. The minimum requirement is 0.1 per cent mineral diesel to 99.9 per cent biodiesel (the US B99 blend) for maximum tax credit. Thus 100 gallons of B99 will be eligible for a tax credit of US$99.90. This was termed “Splash and Dash” to describe the manner where the biodiesel is blended to benefit from the subsidy before being shipped to the EC.

THE PROBEThe new import duties come following an investigation launched by the European Commission in June last year, after complaints from European producers that

US biodiesel was being sold cheaper than the vegetable oil raw material used to produce biodiesel in Europe.

The Commission found imports from the US to have increased significantly, from 11,504 metric tonnes in 2005 to more than 1 million tonnes during the period of investigation last year (Table 1). US imports took a market share of 17.2 per cent, compared with just 0.4 per cent in 2005. Thus, the Commission deduced that there was dumping, both in absolute and in relative terms, when compared with EU consumption during that period.

Despite booming biodiesel consumption in the EU during the period analysed (Table 2), the market share of producers sampled grew only modestly and they just saw a 5.8 per cent gain in market share between 2006 and June last year (Table 3). During the same time, imports from the US expanded 16.2 per cent (Table 1), proving that producers in the EU did not benefit from market growth.

The investigation found average prices for US biodiesel to be between 18.9 and 33 per cent cheaper than EU biodiesel. This price undercutting, European biodiesel producers said, had affected local production, especially the smaller producers.

BIOFUELUpdatesUpBrakes on America’s

‘Splash & Dash’ Biofuel European Union import probe results

in new taxes on green fuel from the US

Community Consumption 2004 2005 2006 2007 IP

Tonnes 1,936,034 3,204,504 4,968,838 6,644,042 6,608,659

Index 2005 = 100 60 100 155 207 206

Source: Official Journal of the European Union, No 193/2009

Table 2: Community Consumption

2004 2005 2006 2007 IP

Sales volumes (tonnes) 476,552 810,168 1,194,594 1,792,502 1,972,184

Index 2005 = 100 59 100 147 221 243

Market share 24.6% 25.3% 24.0% 27.0% 29.8%

Index 2005 = 100 97 100 95 107 118

Average prices (EUR/tonne) 665 759 900 892 933

Index 2005 = 100 86 100 119 118 1 23

Source: Questionnaire replies of the sampled Community producers.

Table 3: Sales volume, market share and average unit prices in the Community

Table 1: Volume of imports from the USA and market share

Imports from USA 2004 2005 2006 2007 IP

Tonnes 2,634 11,054 50,838 730,922 1,137,152

Index 2005 = 100 23 100 442 6,354 9,885

Market share 0.1% 0.4% 1.0% 11.0% 17.2%

Index 2005 = 100 25 100 250 2,750 4,300

Source: Official Journal of the European Union, No 193/2009

Continued on page 10

MARKETInsightsIns g

MPOC FORTUNE •  9

Power of Chinese Demand

Vegetable oil consumption and its growth rate

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1998, jumping to 991 MT imported in 2003 and leaping to 9,000 MT between January and November last year.

PALM OIL MARKET IN 2008As Chart 3 illustrates, soybean oil played a leading role in edible oil consumption in 2008-09, followed by palm oil, which accounts for 23 per cent. Palm oil consumption increased by 9 per cent to 5.7 million MT for the period 2008-09, overtaking rapeseed oil as the second largest selling oil product. China’s proximity to Malaysia gives palm oil the advantage of lower shipping costs relative to other oils. Another factor contributing to strong demand continues to be the fast expanding market for processed foods, especially instant noodles, which use large amounts of palm oil. The improvement of China’s fractionation capacity has strengthened the demand for palm products in the country, in addition to the wider use of palm oil by more sectors, particularly the chemical industry.

Statistics from the General Administration of Customs show that

China imported 5.1 million MT of palm oil in 2007, and hit an all time high of 5.28 million MT last year. However, overall Chinese consumption has stayed at a high level for quite some time, causing the demand for palm oil to have entered a stable stage, with only moderate increase anticipated.

Of the products imported, palm olein (24°C palm oil, according to the Chinese definition) accounted for 3.9 million MT. Crude palm oil import volume, however, is enjoying an upward trend, and is expected to reach 550,000 MT during 2008-09. The higher import is driven by the relatively low import cost vis-à-vis other palm products, which provides refineries a better profit margin.

China’s transportation and logistic capabilities also dictate the consumption level of palm oil across the country. Palm oil imports are through Guangdong, Jiangsu and Tianjin, accounting for 4.2 million MT or almost 80 per cent of China’s palm oil imports. Guangdong remains the largest province for palm oil import with 1.88 million MT, or 35.6 per cent, followed by Jiangsu at 1.42 million MT.

PROSPECTS FOR 2009The financial meltdown imposed a negative influence on the real economy. It is reported that booming economies like China and India will have a lower growth rate while developed countries will see negative growth. Against this

backdrop, a major decrease in the demand for oils and fats is anticipated.

China is highly dependent on foreign supplies and has become vulnerable to global changes. Multinationals now dominate oilseed crushing and the import of oils and fats, which will cause the domestic market to lose its ability to control the prices of oils and fats. In order to ensure greater domestic supplies, steady prices and to stabilise the edible oil market, Beijing made a number of policies. Some of these measures are:• Reduced tax rebates on the export of

certain vegetable oils from 13 per cent to 5 per cent, from July 1, 2007.

• Price intervention, implemented from Jan 15 to Dec 1, 2008.

• Lowered tariffs on coconut oil and olive oil, from 10 per cent to 5 per cent, between June 1 and the end of September last year.

• Tax rebates on the export of vegetable oils were scrapped from June 13, 2008. The move applies to 36 varieties of vegetable oil products, including soy, peanut and sunflower oils.

According to the US Department of Agriculture, total vegetable oil production by China will hit a record 15.54 million MT in 2008-09, an increase of 6.58 per cent over the previous period, while vegetable oil consumption will reach 24.32 million MT, or 4.65 per cent more. Palm oil import will continue to increase as well, and may reach 5.5 million MT in 2009.

Several factors can explain the growing demand. First, Chinese economic growth will continue this year despite the global financial crisis as the country requires palm oil in food processing and chemical industries, which will continue to expand. Second, China’s enhancing technology, improved fractionation capacity and growing blending of palm oil with soybean, rapeseed and groundnut oils as a result of price competitiveness are bound to stimulate palm oil consumption.

And lastly, the huge Chinese population will help support vegetable oil imports in the long term. Teah Yau Kun/ED

Soybean Oil 39%

Coconut Oil 1%

Rapeseed Oil 19%

Sunflow er Oil 1%

Palm Oil 23%

Groundnut Oil 9%

Palm Kernel Oil 2%

Cottonseed Oil 6%

Consumption Proportion

Chart 3: Consumption Proportionof Major Vegetable Oils

Continued from page 1

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10 •  MPOC FORTUNE

Table 4: Proposed Anti-dumping and Countervailing Duties

Companies Injury Dumping Anti-dumpting AD duty rate Countervailing Margin (%) Margin (%) Duty Rate (%) Euro per tonne net Duty Rate (%)

Archer Daniels Midland 54.6 3.4 3.4 23.6 35.1Company, Decatur

Cargill Inc., Wayzata 58.9 10.4 10.4 60.5 34.5

Green Earth Fuels of 39.8 73.4 0.8 70.6 39.0Houston LLC, Houston

Imperium Renewables Inc., Seattle 41.6 29.5 12.5 76.5 29.1

Peter Cremer North America 69.9 57.3 28.9 208.2 41.0 LP, Cincinnati

World Energy Alternatives 41.7 51. 7 4.1 82.7 37.6LLC, Boston

Cooperating non-sampled companies 51.4 33.7 15.4

Source: Official Journal of the European Union, No 193/2009 & No.194/2009

THE NEW RULESThe probe led to the imposition of temporary anti-dumping duties on biodiesel imports from the US, ranging from €24/MT to €208/MT, and countervailing duties ranging from 15.4 per cent to 41.1 per cent. These levels of the duties have been determined at different rates for the importers, as Table 4 shows.

These measures will be in effect for four months from March 13, when the investigation is expected to be completed. Based on the findings, the European Commission will make its recommendation to the EU whether the so-called “definitive” should be imposed for the usual five years.

For further details of the Commission’s investigation, please refer to the Commission Regulation (EC) No 193/2009 and No 194/2009 of March 11 2009. ED

Brakes on America’s “Splash & Dash” Biofuel

Continued from page 7

MARKETInsightsIns g

PRODUCTFeatureFeComfort Sleep With Palm Oil-basedNatura™ Foam

Launching ceremony of Wansern’s Natura™ palm oil-based polyurethane products

From right: Dr Hazimah Abu HassanDirector of Advanced Oleochemicals Technology Division, Malaysian Palm Oil Board Mr Eu Tian Chiek, Managing Director of Wansern Group and Dr Ooi Tian Lye Managing Director of Wansern Biotechnology Sdn Bhd

For more information: Kindly refer to company website http: // www.wansern.com Or contact: Dr Ooi Tian Lye ooitl@wansern.com H/P: +6012-7981150 or Fax: +607-4858899

Currently, about 85 % of the palm oil produced is used in food applications such as frying oil, cooking oil, margarine, ice-cream, instant noodles and confectionary. Only about 15 % is used in non-food uses with soaps and detergents which constitutes more than 90 % of the non-food applications. Other non-food uses are in cosmetics, personal cares, rubber, candles and others. However, no significant applications are seen in the area of polymers such as polyurethanes.

Do you know that whenever you rest in the office or at home or in the car, the chairs, sofa, bed and car seats are mostly made from polyurethane foams? Polyurethanes, is a group of polymers with highly versatile properties and a wide range of commercial applications such as construction, automobile, refrigeration, furniture, adhesives and sealants, footwear, transportation, packaging and coatings. Generally, there are three main types of polyurethanes that can be obtained namely rigid, semi-rigid and flexible foams. The global production of polyurethanes was about 13.5 million tonnes in 2005. As an estimate, flexible foam and rigid foam captured 43 % and 24 % of the market size. CASE (coatings, adhesives, sealants and elastomers) constitutes 23 % while the others, 10%.

Polyurethanes are usually formed by reacting polyols with isocyanates and additives such as surfactant, blowing agent, crosslinker, flame retardant, antioxidants and others. Currently, most of the commercially available polyols are petrochemical-based. However, with the increasing concern of the rapidly depleting mineral oils and environmental issue, the use of renewable resource for the production of polyols, with comparable properties and characteristics of petrochemical – based polyols is highly desirable and has generated a lot of research interest.

In the flexible polyurethane market, great growth has been seen in what are known as viscoelastic or memory foams. These types of foams differentiate them from the traditional flexible polyurethane foams which are relatively highly resilient. Viscoelastic foams are used in applications where slowness to recovery is

required. Apart from being slow to recover, these foams are soft to the touch and conform to body shape, hence providing even pressure distribution to a person lying or sitting on the furniture/mattress produced from these foams. These foam products also react to body temperature and ambient temperatures, softening with heat and more easily adjusting to body contours. Viscoelastic foam’s unique physical characteristics have led to its popularity in the bedding and medical industries. Due to its conforming aspect, viscoelastic material makes for a comfortable yet supportive mattress or mattress pad, and its low resilience works well in bed pillows. People with impaired mobility, confined to wheelchairs or hospital beds, for instance burn victims and bed ridden patients can benefit from foam’s capacity to redistribute weight and surface pressure, potentially reducing bed sores caused by aggravated pressure between the skin and bony areas of the body such as beneath heels, hips, elbows and the back of the head. If pressure is not relieved through body movement, such as using a viscoelastic foam surface, blood vessels may compress, inhibiting circulation and possibly irritating the skin tissue. Aside from bedding and medical purposes, viscoelastic material can be used in standard household furniture, office furniture, and in some vehicle seating applications. It can cushion sports equipment and footwear. Viscoelastic foams has also found utility in ergonomic applications such as neck, leg and back pads. It can act as shock protection for electronics equipment and has been used in specialty packaging, military and commercial aircraft seating. Even though viscoelastic foam is expensive, about three to four times the cost of regular foam, it is worth to have a good comfortable sleep! Comfort sleep is of utmost importance for a person to perform works effectively the next day. To sleep well, you need a pillow and mattress of good quality.

Formulating and processing of viscoelastic foams can be challenging. Traditionally, viscoelastic foams are produced from petroleum resources. Now the use of renewable resource for viscoelastic foam

represents new and exciting developments for the flexible polyurethane industry. With intensive research, Wansern Biotechnology Sdn Bhd has successfully produced good quality green palm oil-based viscoelastic mattress and pillows of right quality using own in-house developed polyol, Natura™. The polyol has been tested several times in plant scale and we found that one of the interesting features of this polyol is that it is found to be good raw material for the production of special viscoelastic foams suitable for high end bedding, furniture and medical applications. We believe that this is the first such type of commercial foam products based on palm oil. The viscoelastic foam of the invention has reduced odor and better low temperature properties as compared to other viscoelastic foams in the market.

Wansern Biotechnology Sdn Bhd has launched the Natura™ palm oil-based polyol and polyurethane products on 26th July 2008 at Wansern Foam Industry Headquarter, Batu Pahat, Johor, Malaysia. The occassion took place in conjunction with the opening of Wansern’s Products showroom. Palm oil is chosen as the feedstocks for the production of polyol since Malaysia is one of the major producers in the world, producing about 15.8 million tonnes in 2007 and palm oil contributes about 25 % of the world’s total production of oils and fats of about 154 million tonnes. Moreover, in using palm oil, there are several other advantages envisaged and these include:• Palm oil is a renewable resource and

sustainable resource. Unlike petroleum which is a depleting resource

• Reduce the dependence and consumption of non-renewable petroleum which are all imported

• Safer and healthier for both workers and consumers

• Price of palm oil is relatively more stable than petroleum price

• Environmental friendly• Less global warming emissions

We strongly believe that 21st century is an era for technology advancement of the biobased polyurethane foams.

MPOCOffices

WorldwideMalaysian Palm Oil Council (MPOC)2nd Floor Wisma Sawit Lot 6, SS 6, Jalan Perbandaran47301 Kelana Jaya, SelangorTel: 603-7806 4097Fax: 603-7806 2272www.mpoc.org.my

American Palm Oil Council Suite # 690, 21515 Hawthorne Blvd.Torrance CA 90503, USATel: +1 (310) 944 3910Fax: +1 (310) 944 3544www.americanpalmoil.comE-mail: kassim@americanpalmoil.comContact: Mohd Salleh Kassim

MPOC Africa Regional Office5 Nollsworth Crescent, Nollsworth ParkLa Lucia Ridge Office Estate,La Lucia 4051, KwaZulu-Natal, South AfricaTel: +27 (31) 5666 171Fax: +27 (31) 5666 170E-mail: kumar@mpoc.org.zaPostal Address:P.O.Box 1591M.E.C.C. 4301, South AfricaContact: Uthaya Kumar

MPOC Bangladesh62-63 Motijheel Commercial Area,7th Floor, Amin Court Building,Dhaka, BangladeshTel: +88 (02) 9571 216Fax: +88 (02) 9551 836E-mail: fakhrul@mpoc.org.bdContact: Fakhrul Alam

MPOC Shanghai, ChinaShanghai Westgate Mall Co. Ltd.Room 1610B, 1038 Nanjing Rd. (w)Shanghai 200041, P. R. ChinaTel: +86 (21) 6218 2085 / 6218 2086Fax: +86 (21) 6218 1125E-mail: teah@mpoc.org.cnContact: Teah Yau Kun

MPOC Pakistan11 – 3rd Floor, Leeds CentreMain Boulevard Gulberg, 111 Lahore, PakistanTel: +92 (42) 5716 600 / 5716 601Fax: +92 (42) 5716 602E-mail: faisal@mpoc.org.pkContact: Faisal Iqbal

MPOC India S-4, New Mahavir Building, Cumballa Hill Road Kemps Corner, Mumbai 400 036Tel: +91 (22) 6655 0755 / 6655 0756Fax: +91 (22) 6655 0757E-mail: bhavna@mpoc.org.inContact: Bhavna Shah

MPOC Europe Regional Office31 Avenue Emile Vendervelde1200 Brussels BelgiumTel: +32 (2) 7748 860Fax: +32 (2) 7794 371E-mail: zainuddin@skynet.beContact: Zainuddin Hassan

MPOC Cairo3 Gamal E1-Din Afify Street, Nasir CityZone No.6, 11371 Cairo, EgyptTel: +20 (2) 2273 8108Fax +20 (2) 2273 8106E-mail: kazmi@mpocegypt.comContact: Kamal Azmi

MPOC IstanbulGuzel Konutlar SitesiDilek Apartment Daire 3Balmumcu, Besiktas - Istanbul, TurkeyTel: +90 (212) 2668234Fax +90 (212) 2668236E-mail: haznita@mpoc.org.myContact: Norhaznita Husin

Advertising in the Malaysian Palm Oil FORTUNE is probably one of the most economical methods of advertising.

Discounts of 5%, 10% and 20% are available for placements of 3 months, 6 months and one year, respectively.

For enquiries, please e-mail: fortune@mpoc.org.myor contact: Tel: 603-7806 4097 (Ms. K.M.Sum)

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