By Emily Chow
KUALA LUMPUR, July 25 (Reuters) - Malaysia's biodieselproduction and exports are set to hit record levels this year aslow palm oil prices increase the appeal of blending to makebiofuels, the head of an industry association told Reuters onThursday.
Output is forecast to rise 55% to 1.4 million tonnes in2019, said U.R. Unnithan, president of the Malaysian BiodieselAssociation, while exports are pegged at 600,000-650,000 tonnes,up around 16%-24%.
The forecast comes after the European Commission onWednesday proposed duties ranging from 8% to 18% on imports ofbiodiesel from neighbouring Indonesia, countering what it saysare unfair subsidies. Indonesian authorities plan to challengethe duties.
"Temporarily this will benefit Malaysia for (biodiesel)exports, which were already quite healthy for the first sixmonths this year," said Unnithan.
"It will mean higher exports in the second half of 2019.Last year was the best year in terms of overall production andexports, and I'm hoping that 2019 is better than 2018."
Malaysia, the second largest palm oil producer afterIndonesia, produced 900,000 tonnes of biodiesel last year,according to an earlier estimate by Unnithan.
Data from the Malaysian Palm Oil Board put exports at288,074 tonnes in the first half of 2019, and 515,467 tonnes in2018.
Low prices for palm oil, which is used as feedstockto make the bio components of biodiesel, have encouraged theuptake of palm-based biodiesel in markets such as China and theEuropean Union, said Unnithan.
Diesel's premium over palm oil widened this year,hitting $163 per tonne in March, the widest in four months. Thespread has since narrowed, falling to $90 on Wednesday.
(Reporting by Emily Chow; Editing by Subhranshu Sahu andRichard Pullin)