By Rubina Obaid
Malaysian government decided to implement restriction of movement order for the month of March and later the extension has been announced, nonessential business premises have to be shut down to curb the spread of infectious disease, that is greatly impacting biomass sector.
Outbreak of pandemic CoronaVirus triggered huge fear and fueled the situation of emergency around the globe. Dramatic measures have been taken by the government all around the world, majorly cutting down all the activities and encouraging lockdowns. This led to putting brakes on various industrial activities and promoting social distancing to curtail increasing number of cases. The situation in Malaysia also got alarming due to hundreds of cases arising each day, therefore, Malaysian Prime minister Muhyiddin Yassin announced to extend the country’s Coronavirus lockdown by two weeks from the initial cutoff point till the end of the month. The decision has greatly impacted various Malaysian industries and hit the pockets of industrialists to common men as well.
The restriction would also massively impact the suppliers of palm kernel shells (PKS) due to the strict measures taken by the Malaysian government to be imposed on Palm oil industry by today that will restrict the plantation during 25th of March till 31st of March and also would restrict the mills till 31st of March. Initially, the shutdown was on non-essential businesses from 18th till 31st of March, but eventually, the order was extended due to the rising confirmed cases of coronavirus in the country. The figure reached 1,796 confirmed cases which is the highest prevailing number in Southeast Asia. Initially, palm oil mills and plantations were shutdown and later the appeal was lodged by the suppliers against the decision but the government sustained on the decision to shut down palm oil estate across the district of Tawau, Lahad Datu and Kinabatangan at least till the end of this month. The decision was taken after some palm oil workers got affected by the virus.
Due to extended lockdown and restriction on PKS industries, aggravated the problems of logistics and created huge hurdles to screen and operate stocks and to move the cargoes. Malaysia is second largest exporter of wood pellets and PKS after Indonesia, in the year 2019 Malaysia exported 707,000t of PKS and 615,000t of wood pellets. The current situation has reduced the production of fresh fruit bunches and ultimately squeezed the supply of PKS, which in turn pushed up the spot east coast Sumatra Indonesian PKS price for the first time since Argus began the assessment in May 2017. South Korea and Japan are dependent upon biomass for their power plants, whereas South Korean buyers are trying to reschedule their cargoes with the suppliers due to the unanticipated lockdown.
Wood pellets supplies tightened from Vietnam and Malaysia due to the shortage of raw material, as the spread of coronavirus in China reduced the demand for wood products and furniture that fostered the prices to edge up at $98.95/t on 18th of March. Also, Thailand being one of the second largest consumers of PKS in 2019 has widely affected by the virus with a rippling effect on neighboring countries which is also adversely impacting the demand of PKS and wood pellets. On another note, the Malaysian prime minister did not preclude the possibility of lockdown to be extended.