Amid Terminal Industries Demand Slump, Fatty Alcohol Prices Decline in Germany

Hamburg, Germany: Throughout the third quarter of 2023, the prices of Fatty Alcohol have demonstrated a volatile trend in the domestic market of Germany. Amidst the fragile demand from the downstream Personal Care industries, the manufacturers have kept prices low. The European Central Banks' efforts to combat inflation through interest rate increases have led to higher investment financing expenses, depicting numerous personal care industries as unviable projects and dampening the overall market sentiments for key raw materials, including Fatty Alcohol.

As per the market sources, in September, the sentiment among German exporters deteriorated even further, reaching its lowest level since May 2020, taking a toll on the market fundamentals of Fatty Alcohol. The invasion of Ukraine by Russia and the subsequent reduction in the availability of affordable natural gas from Moscow has caused significant and unprecedented disruption to Germany's energy-intensive manufacturing sectors, such as the Personal Care industries. This cascade of negative factors has significantly impacted the market performance of Fatty Alcohol across the European market. The ChemAnalyst database has shown the prices of Fatty Alcohol have plummeted by approximately USD 50 per ton at the end of the third quarter in the German market.

On the other hand, the overproduction of upstream Palm Oil in the key manufacturing nation, Malaysia, has led to price cuts for the manufacturers of its downstream derivatives such as Fatty Alcohol, Detergent Alcohol, Fatty Acid, etc. As a result, the reduction in upstream prices has been translated into a subsequent drop in the price realizations of Fatty Alcohol on a w-o-w basis. The market players have also reported that the inflow of new orders from the downstream Personal Care industries was average, and the market players in the European market were cautious about the terminal market in the approaching fourth quarter of 2023.

Furthermore, The ongoing labor dispute in Australia's major LNG facilities has caused a drop in natural gas shipments, resulting in a significant increase in natural gas prices in both Europe and the United States. However, Europe's gas storage is at 95% capacity as the winter gas season starts on October 1st. Still, it can only cover one-third of the EU's heating needs, leaving it vulnerable to depletion during severe cold spells., potentially causing supply shortages for Fatty Alcohol manufacturing firms.

According to the pricing intelligence of ChemAnalyst, reduced production during the holiday season may lead to a shortage of finished Fatty Alcohol, impacting its availability for the downstream Personal Care industries. Although the Fatty Alcohol demand is expected to remain relatively low in the European market, the rising supply-side pressure might increase the manufacturer's quotations in the forthcoming weeks.