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NEWS ADMIN

Mahamad Rodzi Abdul Ghani

DATE

28/03/2002

NEWS PROVIDER

Mahamad Rodzi Abdul Ghani

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NULL

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HEADLINE

China quietly enters CPO mart
28 March, 2002 (Business Times)CHINA has already made its presence in the local palm oil marketunannounced to avoid sending upward pressure on prices.Traders said China deliberately pulled the move to capitalise on currentpalm oil prices which are hovering hover between RM1,100 a tonne to andRM1,150 a tonne or risk buying at higher prices later on.“The Chinese Government is a smart marketeer as it knows prices will rallyonce its intention to enter the market is made known,” a trader toldBusiness Times in Kuala Lumpur yesterday.According to the Malaysian Palm Oil Board’s website China had in Januaryand February bought 44,848 tonnes and 89,411 tonnes of Malaysia’s palm oilrespectively.China, Malaysia’s third biggest buyer last year at 1.28 million tonnes haspledged to buy 2.4 million tonnes of palm oil following its formal entryinto the World Trade Organisation on December 12 last year.The amount is higher by one million tonnes from its traditional annualpurchase of 1.4 million tonnes.The industry had speculated that China would initiate its palm oilpurchase soon following the expansion of its import volume.Traders have widely speculated that China would start on its buying spreeas early as January, a move that has not been made till yesterday.China’s State Development and Planning Commission was supposed to announceabout ten authorised importers from the private sector by March 7 but tillyesterday has yet to do so.The authorised companies must first obtain approval from the commissionbefore they are allowed to import on the country’s behalf.“Even though, the identities of the companies already in the market arenot known the industry suspects they are actually the authorisedimporters,” said the trader.He added that a stronger presence from will be felt when prices droppedbelow the RM1,000 a tonne . level.“Maybe then, China will actually make public the identities of theimporters,” he said.But the scenario is unlikely as most industry observers had said palm oilprices are expected to firm up till year-end due to the possibility of ElNino and oil palm trees face production fatigue.Traders have also speculated on Monday that China’s delay in entering themarket is actually a trade reprisal against the US for hiking increasingsteel imports to a maximum of 30 per cent on March 6.They said China, also a major steel producer, had deliberately dragged itsfeet in purchasing US soyabean, a move that unfortunately affects Malaysia’s palm oil as well.Malaysia is the world’s biggest producer of palm oil accounting for 52 percent of total output. It produced 11.803 million tonnes last year of which10.593 million tonnes are exported to 140 countries.