The renewed purchases come as India, the world’s biggest buyer of palm oil, is trying to augment supplies to calm near-record local edible oil prices.
The purchases could help Indonesian and Malaysian refiners build market share in India and support benchmark Malaysian palm oil prices.
Indian buyers have contracted up to 70,000 tonnes of refined bleached deodorized (RBD) palm oil, mostly from Indonesia, to be shipped in July and August, traders and brokers told Reuters.
India on Wednesday allowed imports of refined palm oil for six months and cut the import tax on refined palm oil to 41.25% from 49.5% for three months to bring down local edible oil prices.
“Suppliers are raising RBD palm oil prices seeing Indian demand. They have raised prices by more than $30 per tonne in a week,” Sandeep Bajoria, chief executive of vegetable oil broker Sunvin Group said.
Indian buyers started contracting RBD palm oil at around $1,015 last week but are now paying around $1,050 per tonne, a Mumbai-based vegetable oil dealer said.
“Importing refined palm oil is cheaper than importing and processing crude palm oil,” he said.
India, which imports palm oil mainly from Indonesia and Malaysia, could buy 150,000 tonnes of refined palm oil a month, Bajoria said.
Indonesian RBD palm oil is now available at a $5 per tonne discount to crude palm oil, compared to a discount of nearly $35 a week ago, said a Mumbai-based dealer with a global trading firm.
“The sudden surge in demand is allowing refiners to raise prices. Supplies are limited for July shipments,” he said.