Chemrez expects its oleochemical margins to improve this year
RUBY ANNE M. RUBIO, GMANews.TV
04/15/2009 | 05:48 PM
MANILA, Philippines - Listed Chemrez Technologies, Inc. expects profit margins for its oleochemical segment to improve this year, thanks to a law increasing the use of the substance in diesel fuel.
Oleochemicals, derived from biological oils and fats, account for 42 percent of the total revenues at P162.58 million. The segment posted lower profit margins at 10 percent in 2008 from 22 percent the previous year amid higher biodiesel sales.
The business experienced increased competition resulting in lower selling prices, Chemrez said, blaming volatility in coconut and oil methanol prices.
"With the mandated biodiesel blend increasing to two percent from one percent as of Feb. 6, 2009, it is expected that oleochemicals will continue to be the largest operating business of the company, contributing the majority of the company’s revenues," Chemrez said in a regulatory filing.
However, the biodiesel business is expected to experience increased competition as more new entrants start their operations, resulting in even more aggressive selling prices and lower margins," Chemrez said.
Eleven companies including Chemrez registered as biodiesel producers, with total production capacity of more than 300 million liters per year, the Department of Energy said.
Chemrez said this is more than double the capacity required for the B2 or 2 percent blend under the Biofuels Act of 2006.
“While coco-biodiesel will be expected to be its flagship product under the oleochemical and biopetroleum segment this year the company is well underway to exploit opportunities for coconut methyl-ester based specialty products in the export market," Chemrez said.
Nevertheless, it will mainly “look to the domestic market where the national mandate preempts other types of biodiesels from being introduced," it added.
The company expects to be play a bigger supplier role in the local market, being a significant producer of coco-biodiesel.
Its other oleochemical products include glycerine and other methyl ester derivatives, which are used mainly as surfactants or foaming agents for soaps and detergents, and are mainly produced for export.
Next: Oleochemical industry contracts as recession cuts demand
Oleochemicals, derived from biological oils and fats, account for 42 percent of the total revenues at P162.58 million. The segment posted lower profit margins at 10 percent in 2008 from 22 percent the previous year amid higher biodiesel sales.
The business experienced increased competition resulting in lower selling prices, Chemrez said, blaming volatility in coconut and oil methanol prices.
"With the mandated biodiesel blend increasing to two percent from one percent as of Feb. 6, 2009, it is expected that oleochemicals will continue to be the largest operating business of the company, contributing the majority of the company’s revenues," Chemrez said in a regulatory filing.
However, the biodiesel business is expected to experience increased competition as more new entrants start their operations, resulting in even more aggressive selling prices and lower margins," Chemrez said.
Eleven companies including Chemrez registered as biodiesel producers, with total production capacity of more than 300 million liters per year, the Department of Energy said.
Chemrez said this is more than double the capacity required for the B2 or 2 percent blend under the Biofuels Act of 2006.
“While coco-biodiesel will be expected to be its flagship product under the oleochemical and biopetroleum segment this year the company is well underway to exploit opportunities for coconut methyl-ester based specialty products in the export market," Chemrez said.
Nevertheless, it will mainly “look to the domestic market where the national mandate preempts other types of biodiesels from being introduced," it added.
The company expects to be play a bigger supplier role in the local market, being a significant producer of coco-biodiesel.
Its other oleochemical products include glycerine and other methyl ester derivatives, which are used mainly as surfactants or foaming agents for soaps and detergents, and are mainly produced for export.
Next: Oleochemical industry contracts as recession cuts demand
