Fatty Alcohol Prices Slump in Europe Amidst Deterioration in Downstream Procurement

Hamburg, Germany: For the past few weeks, the prices of Fatty Alcohol have been declining in the European market. The decline in consumption from the downstream Surfactant and detergent industries has prompted the manufacturers to adjust the price realizations of Fatty Alcohol on the lower end. The purchasing sentiments remained in dire straits despite a drop in inflation across the Netherlands, Spain, and France. The TTF natural gas prices have also declined as the gas reserves were already above 80% amid a mild winter and weak downstream procurements. In addition, the overproduction of upstream Palm Oil in the major manufacturing Asian countries, Indonesia and Malaysia, in Q2, 2023 has resulted in price discounts for importing nations.

According to the ChemAnalyst database, Fatty Alcohol prices in Germany have decreased by USD 100 per ton on a weekly basis as of the week ending on July 14th. There has been a sharp degree of pessimism among German Fatty Alcohol manufacturing firms aiding subdued terminal demand. The Fatty Alcohol market has been facing competition from China and other Asian countries, providing the finished materials at lower prices. Thus, to remain competitive, the manufacturers have opted for successive Fatty Alcohol price adjustments in anticipation of demand revival from the downstream surfactant and other personal care industries.

Evonik Industries, a leading manufacturer of Fatty Alcohol, expects adjusted EBITDA of between €430 and 450 million in the second quarter. However, adjusted EBITDA fell by around 40 percent compared to the prior year. As per the CEO of Evonik Industries, Christian Kullmann,  "During the first quarter, there were signs of a business recovery for the remainder of the year. Regrettably, the anticipated recovery in May and June fell short of our expectations, revealing a much weaker performance. While our contingency measures helped mitigate a more substantial decline in earnings, we are still experiencing the impact of a sluggish global economy."

Furthermore, the other hand, European Central Bank has raised eurozone interest rates to their highest level in 22 years in the last month, and a ninth consecutive hike was anticipated this month to bring the inflation down to the 2% target by European Central Bank, which will further pressure the purchasing power of the end-use industries. The market players have also been adopting a cautious and prudent stance given the challenging macroeconomic outlook along with the ongoing geopolitical tensions between the two largest economies in the world, China and the US.

According to the pricing intelligence of ChemAnalyst, the prices of Fatty Alcohol might sustain their downward trajectory in the European market. The continued inflationary pressures and tight monetary policies are likely to pressure the buying sentiments of the Fatty Alcohols market players on a broader level. In addition, the declining energy prices will also exert downward pressure on the manufacturing costs of Fatty Alcohol in the near term.