China’s Imports of Palm Fruit Oil Now At A Record High Vegetable And Animal Oils And Fats April 16, 2015
Author: Svetlana Sitkova
Head of Industrial Research Department

With a population of over 1.3 billion, China is one of the biggest palm fruit oil consumers in the world. Palm fruit oil consumption in China is primarily shaped by imports (90% of total consumption). From 2007-2013, Chinese palm fruit oil consumption increased by 2.4%. Per capita consumption increased from 4.22 kg/year in 2007 to 4.69 kg/year in 2013. The highest level of per capita consumption was registered in 2009 at 5.15 kg/year. 

Despite being cultivated mostly in Malaysia, Thailand, Indonesia and Papua New Guinea, palm fruit oil is primarily consumed in China. As Chinese facilities for palm fruit oil production are scarce, its demand is met almost entirely by imports. Palm fruit oil is not only used for cooking, but has also become a common ingredient in margarine, baked goods, convenience foods and confectionery, and even in products such as candles and cosmetics. 

In 2013, Malaysia (58.5%) and Indonesia (40.6 %) were the main suppliers of palm fruit oil, making up 99.1% of Chinese imports. The share of Indonesia increased significantly (+13.5 percentage points), while the share of Malaysia illustrated negative dynamics (-12.8 percentage points).

In 2013, the Democratic People's Republic of Korea and Kyrgystan were the main countries of destination of Chinese palm fruit oil, with a combined share of 65.6%. The Democratic People's Republic of Korea was the fastest growing palm fruit oil importer (+185.4% per year). 

The food processing industry has always been heavily reliant on international trade to source its main raw materials. With that in mind, large food companies try to reduce the volatility in raw material prices by establishing long-term pricing agreements and backward integration (contractual farming). These factors will strongly influence the market in the medium term. 

Source: China: Palm Fruit Oil - Market Report. Analysis And Forecast To 2020