Palm Kernel Oil

Palm Kernel Oil Global Market Outlook:

Global Palm Kernel Oil Supply (2020/2021 F): 8,912 Thd MT
Indonesia Palm Kernel Oil Supply (2020/2021 F): 4,958 Thd MT

Key Palm Kernel Oil Producing Countries:

• Indonesia (56 percent)
• Malaysia (25 percent)
• Thailand (4.6 percent)
• Nigeria (3.8 percent)

Porter's Analysis on Palm Kernel Oil

Supplier Power

• The suppliers have higher negotiation power than buyers, as the market supply is volatile and demand is high
• The suppliers are fragmented and volumes are smaller from buyers that are not large in scale or integrated

Barriers to New Entrants

• Palm kernel oil refineries require capital and equipment, and the industry runs on economies of scale
• Palm and its derivatives also have a lot of environmental concerns, and hence, the scope for new plantations is high
• Hence, the barriers to new entrants are high

Intensity of Rivalry

• Palm kernel oil is mainly used in oleochemical industries. The supply of palm kernel oil depends on the yield related to weather conditions
• The rivalry in the palm kernel oil industry is medium to high, as there are alternate substitutes, such as palm, coconut oil, etc.

Threat of Substitutes

• Palm kernel oil cannot be easily substituted by palm and other vegetable or animal fats, due to its high lauric content. However, they are being substituted in low quality soap products by other oil and their processed variations
• Palm stearin, coconut oil, and other vegetable oil-based substitution take place depending on the price spread

Buyer Power

• The major buyers of palm kernel oil are the oleochemical companies and personal care companies
• They do not influence the prices as much as the suppliers. The prices are driven by seasonal and fundamental factors