Amidst Active Terminal Demand, Fatty Acid Prices Progress in the Northward Direction in July 2024

Hamburg, Germany: Over the past few months, the prices of Fatty Acid have been continuously rising across the regional market. The rise in the demand from the downstream Asian Personal Care industries has been keeping the market sentiments buoyant. The rise in freight charges amid the geopolitical tensions has also led to an increase in the transportation costs of upstream raw materials, Palm Oil for the European countries, further keeping the Fatty Acid market sentiments bullish.

According to the ChemAnalyst database, the prices of Fatty Acid have settled on the higher end in the domestic market of Indonesia in July. The inquiries from the terminal industries have prompted the manufacturers to revise their Fatty Acid quotations. Furthermore, as per the market sources, Indonesia's palm oil supply is expected to remain tight throughout 2024 due to adverse weather and high input costs, potentially benefiting Malaysia. Analysts predict a 200,000-tonne decline in production, keeping inventory levels low and CPO prices high, which could lead to an escalation in the prices of downstream derivatives, including Fatty Acid. On July 30th, Indonesia's Ministry of Trade set the reference price for palm oil at $820.11 per ton for the period from August 1st to 31st, up from $800.75 per ton in July. For August, the export tariff for crude palm oil remains at USD 33 per ton, the export fee is USD 85 per ton, and the total export tax is USD 118 per ton, unchanged from July.

On the other hand, in the Netherlands, the pace of inquiries from the downstream personal care industries has remained moderate. In addition, the manufacturers have slowed their procurement levels amid the holiday season as most of the manufacturing firms are expected to reduce their operating rates or undergo maintenance shutdowns. On the upstream front, the availability of Palm Oil remained sufficient to meet the demand from the downstream manufacturing firms.  As of July 28th, for the 2024/2025 fiscal year (July to June), the European Union imported 59,000 tons of palm oil from Malaysia, representing 40.3% of total EU imports. This is an increase from the 57,000 tons and 19.8% share recorded during the same period last year.

According to the pricing intelligence of ChemAnalyst, the prices of Fatty Acid are expected to move in a northward direction in coming weeks. The upcoming festive season in the Asian market is likely to support the market growth of Fatty Acid. However, in the European market, the procurement volumes of Fatty Acid are likely to remain subdued and the price movements are to be driven by production challenges during the holiday season.