Global Fatty Alcohol Market Faces Pressure from Rising Palm Oil Costs
- 01-Nov-2024 1:30 PM
- Journalist: Thomas Jefferson
The global Fatty Alcohol market has been significantly impacted by the recent surge in palm oil prices. As a key raw material for Fatty Alcohol production, the increased cost of palm oil has led to higher production costs for manufacturers. This, in turn, has resulted in increased prices for Fatty Alcohol products in both China and Germany.
According to the Malaysian Palm Oil Council (MPOC), a sharp decline in palm oil stockpiles in Malaysia would keep prices high, but low energy costs, a soybean oil supply excess, and palm oil's price advantage over soft oils might cap the rise. Key factors impacting palm oil supply and demand as we approach the fourth quarter of 2024 include India's palm oil inventory levels, Indonesia's B40 biodiesel strategy, and worldwide production and consumption projections for the four major vegetable oils in 2025, according to the MPOC. Malaysia's benchmark crude palm oil futures are now trading at a six-month high. According to the MPOC, Malaysia's palm oil output surged by 8.7% to 1.15 million tonnes from January to September, while exports grew by 12.9% to 1.41 million tonnes.
The recent uptick in palm oil prices has had a ripple effect on the Chinese Fatty Alcohol market. As a key raw material for Fatty Alcohol production, palm oil's price surge has led to increased costs for domestic manufacturers.
As palm oil was a key raw material in the production of Fatty Alcohol, the recent surge in palm oil prices has had a direct impact on Fatty Alcohol costs. Manufacturers were compelled to pass on these increased costs to consumers, leading to higher Fatty Alcohol prices.
The German Fatty Alcohol market witnessed a price surge in October, mirroring global trends.
On the other hand, Malaysia, facing increasing pressure from Western markets over sustainability concerns, was turning its focus to Asian and African countries to expand its palm oil trade. The country was committed to sustainable practices and biodiversity conservation, despite criticisms.
Malaysia is concerned about the upcoming EU Deforestation Regulation (EUDR) which could significantly impact its palm oil exports. The government was emphasizing the importance of economic viability alongside environmental sustainability, ensuring that farmers and the industry could thrive.
Looking ahead, the prices of Fatty Alcohol are expected to remain elevated in both China and Germany. Restart of new procurements post golden week holidays may affect the prices of the product. Regional procurements may remain persistent during this month. Palm oil prices may affect the prices of the commodity.