KUALA LUMPUR (July 19): The Ministry of Plantation Industries and Commodities (MPIC) on Tuesday (July 19) said it remains optimistic that China will increase its palm oil imports despite the current global challenges.

Its minister Datuk Zuraida Kamaruddin said China is expected to import an estimated volume of 4.8 million metric tonnes (MT) of palm oil globally in 2022 based on the assumption that the June-December 2022 import quantity is at par with the same period in 2021.

This is set against current global economic challenges such as the high-interest rate environment, inflationary pressure, and recessionary concerns.

“China, which does not produce palm oil on its own, is currently the world’s second-largest market for the commodity after India.

“China also supports and accepts the Malaysian Sustainable Palm Oil (MSPO) certification, which has enabled the palm oil industry in China to enhance its corporate image while fulfilling its corporate social responsibilities and realising China's National Green Policy.

“The MSPO helps portray the positive image of China's manufacturers in support of Malaysia's efforts to improve the living standards of oil palm smallholders, as well as complement the goals of China's Belt and Road Initiative (BRI) towards socio-economic development of both countries,” she said in a statement.

Zuraida’s explanation follows a recent statement by China's Foreign Affairs Minister and state councillor Wang Yi that the world’s second-largest economy is ready to import more palm oil, tropical fruits, and other agricultural products from Malaysia during his visit here.

She viewed this as a good piece of news given the uncertainties shrouding the international palm oil trade, as evident by plummeting crude palm oil prices to sub-RM4,000 per MT level after a spike to above RM8,000 per MT in March this year.

In 2021, China accounted for 11% of total global palm oil imports and 12% of Malaysian palm oil exports. Last year, China imported 6.38 million MT of palm oil, from which Malaysia’s portion made up 1.67 million MT.

For the five-month January to May 2022 period, the high vegetable oil prices have deterred buyers and traders in China from actively importing both palm oil and other edible oils, hence prompting palm oil imports to drop 58.3% year-on-year or 1.52 million MT to only 960,000 MT.

Between January to June 2022, Malaysian palm oil exports to China stood at 565,842 MT, which is 175,640 MT or 31% lower compared to the same period of last year.

Zuraida noted that in China, about 75% of its imported palm oil is consumed in the food sector, including catering, instant noodles, food processing, and bakery and confectionery sectors.

“Palm products other than palm oil enjoy a good share in non-food sectors, notably within the oleo-chemicals industry,” she added.

However, Zuraida expects it is unlikely for China’s total palm oil imports in 2022 to come close to the volume recorded in the prior year.