Fatty Alcohol Prices Surge in Asia Amidst Palm Oil Price Rally, Impact on Western Market Imminent

Jakarta, Indonesia: Over the past few weeks, the prices of Fatty Alcohol have been continuously rising in the Asian markets. The increase in upstream Palm Oil prices has translated into price gains for the manufacturing costs of Fatty Alcohol. Additionally, the lower operating rates of manufacturing firms in the last quarters have also contributed to the bullish price trend. Crude Oil futures are also observed to be on the higher end, inclining manufacturers to focus on Palm Oil for biofuel production, thereby driving Palm Oil demand higher. On the demand side, inquiries from the Personal Care industries have also been rising, supporting the upward shift observed in Fatty Alcohol prices.

The ChemAnalyst database has shown that the prices of Fatty Alcohol have demonstrated an increment of approximately USD 50 per ton in the domestic market of Indonesia in the week ending 02nd February. According to market participants, the lower production in the previous quarters has exerted supply-side pressure on Fatty Alcohol manufacturing firms. Additionally, the prices of upstream Palm Oil have also risen, offering positive cost support to the price realizations of downstream derivatives, including Fatty Alcohol. On the other hand, Bank Indonesia (BI) has kept interest rates steady to stabilize the Rupiah's exchange rate and maintain inflation within its 2024 target range of 1.5% to 3.5%, lower than the 2% to 4% target in 2023. Thus, Indonesia's inflation rate eased to 2.57% in January, alleviating the strains on the purchasing power of end-use industries.

Meanwhile, Palm oil stocks in Malaysia have been declining for three consecutive months until the end of January, in line with the seasonal low production period in the world's second-largest palm oil producer. According to market sources, palm oil stocks were expected to decrease to 2.14 million metric tons, a 6.62% reduction from December. Additionally, crude palm oil output was projected to reach 1.37 million tons in January, down by 11.83% from the previous month.

According to the pricing intelligence of ChemAnalyst, the prices of Fatty Alcohol are anticipated to remain strong in the Asian market, supported by factors such as improving demand from downstream Personal Care industries. This demand is expected to enhance the market fundamentals of Fatty Alcohol, providing a positive outlook for manufacturers. Furthermore, restocking operations in February are likely to contribute to sustained demand as industries replenish their inventories after the holiday season, potentially further bolstering Fatty Alcohol prices. The rising prices of Fatty Alcohol in Asia will likely to impact the market in the US and Europe as Asian market particularly Indonesia, China and Malaysia remained key exporters.