Oleochemicals Market Intelligence

Industry Outlook & Drivers

Oleochemicals Market Analysis and Global Outlook

The global oleochemicals market is oversupplied with 3 MMT of fatty acids and alcohols. Economic slowdown and a drop in trade volume by 23 percent during 2011–2016, and bio-diesel demand are the key drivers.Trade volume has been increasing since 2017
Preference for natural oleochemicals (75 percent market share in 2017), due to the increasing focus on sustainability factors, is expected to drive the oleochemcials demand from natural oils.

Key Exporting Countries in the oleochemical market include Indonesia (27 percent), Malaysia (25 percent), Netherlands (11 percent),  Germany (9 percent) and US (6 percent)

Key Importing Countries in the global oleochemicals market are China (14 percent), Netherlands (11 percent), US (9 percent), Germany (8 percent), Italy (7 percent).

The best sourcing regions for oleo chemicals are US: Indonesia and China, EU: Malaysia and Indonesia, Africa: Malaysia, Indonesia, and China, Asia: Malaysia and Indonesia

Contract structure

Personal care companies contribute to 26 percent of the oleochemicals demand and have a better buying power
–This provides them the opportunity to revise the contract prices frequently, based on the price trend

• Food & beverages and pharmaceutical industries predominately procure light-cut fatty acids, which is of the less-supplied groups
  –This limits their negotiation power and frequency of price revisions

Buyers Negotitiation Power

• The light-cut fatty acids follow the demand trends. However, light-cut buyers may have an opportunity to negotiate during the harvest season and weak demand period
• Medium cut aligns with the feedstock prices, and it offers better price visibility and negotiation opportunity
• Scope for excess supply provides a better negotiation opportunity for heavy-cut buyers

Fatty Acid –Feedstock Preference

Palm and tallow have major composition (more than 40 percent) of heavy-cut fatty acids and negligible light cut and lauric  acids. On the other hand, PKO and CNO have a wide mix of all the fatty acids. This has positioned PKO and CNO as the preferred feedstock in the olechemical industry.To stay competitive, the basic and downstream oleochemical manufacturers are shifting from synthetics to natural feedstock, like PKO, CNO, and tallow.

Fatty Alcohol –Production Methodologies

Catalyst consumption is lesser in the Lurgi process/Wax ester route compared with the other two processes, namely Davy  process/Acid route and Ester route. Thus, the catalyst cost, and thereby, the overall production cost is reduced by around 50 $/MT at the same fatty alcohol yield rate of 48 percent

Feedstock Trade Analysis –PKO and CNO

PKO is the most traded commodity (3 MMT) among the oleochemical feedstock, due to its ample availability and premium quality of the end products. Southeast Asia is the major exporter (50–55 percent), and the US and the EU (35–60 percent) are the major importers of both PKO and CNO. China also imports a significant amount of PKO (23 percent), majorly for soap production

Global Fatty Acid –Supply–Demand Analysis

The global fatty acid market is expected to remain oversupplied for the next 3 –5 years, due to a rapid increase in production capacity of fatty acids in the past few years and sluggish demand growth rates in China.

Market Outlook (2018)

• Generally, heavy cut, mid cut, and light cut accounts for 65 – 70 percent, 17 – 20 percent, and 6 – 10 percent, respectively.
• Expected increase in palm production levels by 2017– 2018 Y-o-Y is likely to support fatty acids supply in the market
• High CNO prices vs. PKO in 2017 is likely to intensify scarcity in the short  chain fatty acids (C8-C10) and glut supply in long chain fatty acids (C16- C18) market
• Switch to PKO and lower CNO production in the Philippines has largely impacted the light cut fatty acid market by 0.04 MMT
• Demand in the emerging markets, like India and Thailand, is likely to witness an increase in the pcoming years, due to increasing awareness and per capita income

Market Overview

Asia drives the global oleochemical market.The US and the EU are facing tallow insufficiency, hence, opt for synthetic feedstock The growing environmental and regulatory pressures on surfactant manufacturers are driving the natural and renewable raw materials usage Lower prices of lauric oils make it a more attractive feedstock for oleo chemicals than palm and tallow, as they lead to better quality soaps Fatty alcohol market is likely to grow by 4.5% in the next five years. Profitability in fatty alcohols is lesser compared to fatty acids.

Key factors tracked for oleochemicals prices estimations: Total annual production, capacity utilization, cost components (fixed, operating & overhead costs), and profit margins

Why You Should Buy This Report

The report gives details on major oleochemicals supplier profiles like KAO group, IAO group, Wilmar, BASF, etc.It lists out favourable procurement terms, key sourcing destinations. The report gives a thorough cost structure analysis, oleochemical price drivers and constraints and pricing analysis.It gives information on the emerging trends in the end-use industry and Porter’s five force analysis of the global olechemical market. The report gives a detailed regional outlook on the APAC, EU and North America regions. It lists out the impact of trade regulations and tariffs on the oleochemical industry and provides a thorough demand-supply analysis.