Economic Strains and Supply Pressures Drive European Fatty Alcohol Price Shifts in Late February

Hamburg, Germany: In the European market, the challenging macroeconomic environment has persisted, impacting the dynamics of key chemicals such as Fatty Alcohol. Throughout 2023, ongoing inflationary pressures have eroded the purchasing power of end-use industries, leading to weakened market fundamentals for Fatty Alcohol. Moreover, the reduced operating rates of manufacturing firms have begun to exert additional pressure on the supply side, further influencing market sentiments for Fatty Alcohol in Europe. Adding to the complexity, disruptions across the Red Sea resulted in a sharp increase in freight charges between Asia and Europe, driving up shipping costs for upstream Palm Oil, a crucial component in Fatty Alcohol production.

As per the ChemAnalyst data, Fatty Alcohol prices have shown an increment of approximately USD 30 per ton in Germany in the week ending 23rd February. Over recent weeks, Fatty Alcohol prices have consistently increased in Germany's domestic market. This rise is attributed to lower operating rates of manufacturing firms, leading to the limited availability of finished stocks. Additionally, reduced stocks of upstream Palm Oil in key manufacturing nations like Indonesia and Malaysia have driven up Palm Oil values. Despite efforts, the Indonesian Palm Oil industry continues to struggle with meeting European and U.S. regulations on deforestation and forced labor. However, the demand from the downstream Personal Care industries has remained average as most of the market transactions were based on small orders.

On the other hand, in Malaysia, the prices of Fatty Alcohol have been maintaining a stagnant trend for the past few weeks, amidst no significant improvement in demand from the downstream industries. The inquiries from the downstream Surfactant and Detergent industries have remained moderate, leading to stabilized market operations. In addition, following the Spring Festival Holidays, the Chinese market has also resumed operations but at a slower pace. Thus, the manufacturers have avoided the bulk procurement of Fatty Alcohol to maintain the market equilibrium. As per the market sources, exports of Malaysian palm oil products for February 1-25 fell 14.3% to 863,108 tons from 1,006,930 tons shipped during the same period in January, taking a toll on the market sentiments of Fatty Alcohol.

According to the pricing intelligence of ChemAnalyst, the prices of Fatty Alcohol might inch higher, amid an escalation in the upstream Palm Oil values. In addition, following the conclusion of the Spring Festival Holidays, the demand for Fatty Alcohol from China is also anticipated to pick up, as the market players would be willing to restock their inventories to meet the demand from the terminal Personal Care industries.