Fatty Alcohol Prices Face Ongoing Decline in Germany Amid Inadequate Demand

Hamburg, Germany: Towards the late third quarter of 2023, the prices of Fatty Alcohol have been progressing southwards in Germany. Inflationary pressures and falling Palm Oil prices have exerted downward pressure on Fatty Alcohol prices. In addition, insufficient demand from the downstream surfactant sector has exacerbated the price decline as producers grapple with excess inventory. This challenging market scenario has resulted in a sustained drop in Fatty Alcohol prices in the German market.

The ChemAnalyst database has demonstrated that the prices of Fatty Alcohol have plummeted by USD 30 per ton in the domestic market of Germany on a FOB basis. The inquiries from the downstream surfactant and detergent industries have remained lackluster, weakening the market fundamentals of Germany. A series of below-par results seen among German chemical companies, Evonik Industries, a specialty chemical manufacturer, has reported a net loss of nearly $300 million for the second quarter of the year due to a decline in demand for its products, including Fatty Alcohol. In addition, According to the Association of German Chambers of Industry and Commerce, Germany has also been grappling with escalating labor shortages, leading to profound Fatty Alcohol market challenges.

Furthermore, MP Evans, an upstream Palm Oil producer of Fatty Alcohol primarily focused on Indonesia, faced a significant challenge as the average mill-gate price per tonne dropped by 27 percent year-on-year to $755 (£604). This decline substantially impacted the company's revenue, causing it to decrease by more than a fifth. Consequently, the gross margin experienced a substantial decline of 21 percentage points, landing at 17 percent, while operating profits contracted significantly by 62 percent. As a result, the manufacturing costs of Fatty Alcohol have remained on the lower end, and the market players were pessimistic about a further upshift in the price relaxation of Fatty Alcohol across the regional markets.

On the other hand, as per the market sources, the Mediterranean and North European hubs are running smoothly, with little disruption caused by unfavorable weather conditions and the usual increase in activity during the summer. The decrease in workforce typically observed during this time has been effectively managed by terminals and teams, and the performance across European hubs will be maintained in the coming months.

According to the pricing intelligence of ChemAnalyst, the Fatty Alcohol market might witness bearish market sentiments amid an expected slump in demand from the downstream Surfactant and Detergent industries. Furthermore, to combat the inflationary pressures, The European Central Bank (ECB) will maintain its approach of making decisions on a meeting-by-meeting basis. This implies that there is a possibility of a pause in September, with the potential for rate increases at either the October or November meetings if inflation does not subside as quickly as anticipated.