Malaysia's used cooking oil exports to face pressure in 2026 on domestic SAF production

By Ashley Tang

KUALA LUMPUR, Nov 6 (Reuters) - Malaysia's used cooking oil export volumes will face "immediate and moderate pressure" next year as a sustainable aviation fuel plant in Johor ramps up production, the country's deputy plantation and commodities minister told Reuters.

Domestic players will actively secure feedstock to meet the 350,000 tons capacity of the EcoCeres production facility, forcing them to offer competitive pricing to divert used cooking oil away from profitable international export routes, Chan Foong Hin said.

The EcoCeres facility became operational in October and will provide Malaysia’s first major source of ISCC CORSIA and ISCC EU-certified SAF, Chan said.

EXPORTS SURGE; SINGAPORE LARGEST MARKET

According to the Malaysia Palm Oil Board, used cooking oil exports reached 465,257 tons in 2024, up from 310,368 tons in 2023. Singapore was the largest importer, accounting for 284,116 tons, followed by the United States and the European Union with 158,231 tons and 19,819 tons, respectively.

"To manage domestic feedstock supply and secure competitiveness for the SAF industry, the ministry together with the MPOB (palm oil board), is currently reviewing and engaging with stakeholders regarding the potential implementation of a policy intervention to ensure a steady, sustainable supply of UCO for domestic industrial needs," Chan said, using an abbreviation for used cooking oil.

Chan also expects market demand to nearly triple with the commissioning of the Petronas, Enilive and Euglena biorefinery in Pengerang, targeted for completion in the third quarter of 2028.

GROWING FEEDSTOCK DEMAND

"This plant commands a significant feedstock capacity of 650,000 tons. Collectively, these two facilities will create an annual feedstock demand of up to 1 million tons, establishing direct competition with international buyers for the global UCO supply," he said, adding that the challenge in the supply chain will be feedstock collection.

As such, to meet domestic demand, Chan said Malaysia must scale up its domestic used cooking oil collection infrastructure from households and businesses, without undermining supply to other biodiesel sectors or resorting to uncertified imports.

On biodiesel, Chan said production is expected to remain stable next year and expects a moderate increase in domestic consumption as more companies implement higher biodiesel blending pilot programmes to achieve their ESG targets.

Malaysia currently imposes a 10% biodiesel mandate nationwide, though a 20% biodiesel mandate is implemented in the federal territory of Labuan and Langkawi district as well as the state of Sarawak, with the exception of the Bintulu district.