Global Stearic Acid Prices Climb Amid Palm Oil Shortages and Rising Production Costs

In late October 2024, global Stearic Acid prices continued to rise due to increased production costs and shortages of feedstock Palm Oil in key Southeast Asian markets, particularly Malaysia and Indonesia. These developments led to higher-priced imports of Stearic Acid across Asia, North America, and Europe.

Supply constraints in Malaysia and Indonesia stemmed from various government policies and seasonal demand for Palm Oil, pushing Stearic Acid prices higher. Indonesia, the world’s leading palm oil producer, currently mandates a 35% blend of palm oil in biodiesel (B35) and plans to increase this to 40% (B40) to reduce energy imports. This policy has decreased the availability of Palm Oil for Stearic Acid production. Additionally, Indonesia is set to raise its crude palm oil (CPO) reference price for November 2024 to $893.64 per ton, up from $839.53 in October, further driving up production costs for Stearic Acid.

In Malaysia, palm oil stocks at the end of September rose by 6.93% from the previous month to 2.01 million metric tons, the highest level since January, according to the Malaysian Palm Oil Board (MPOB). However, crude palm oil production fell by 3.80% in September compared to August, totaling 1.82 million tons, while exports increased slightly by 0.93% to 1.54 million tons. This combination contributed to lower Stearic Acid production in these markets, resulting in higher inventories globally. Moreover, Malaysia's palm oil exports rose by 8.7% to 9.5% from October 1 to 20, further elevating Stearic Acid prices.

Demand for Stearic Acid in downstream rubber industries was described as moderate, while the automotive sector continued to struggle. In the US, auto sales are expected to grow at a slower pace, with overall new vehicle sales increasing by only 0.2% to 3,882,600 units in the third quarter, negatively impacting demand for Stearic Acid. In Europe, new EU car registrations fell by 6.1% in September 2024, with significant declines in France (-11.1%), Italy (-10.7%), and Germany (-7%), which created unfavorable demand conditions for Stearic Acid. In Japan, new vehicle sales slightly increased to 438,733 units in September 2024 from 437,493 units a year earlier, while the overall vehicle market in the first nine months of 2024 dropped by almost 9% compared to the same period last year. In South Korea, domestic sales by the five main automakers fell slightly to 106,148 units in September 2024 from 106,950 the previous year, with cumulative sales down by 9%.

Currently, Stearic Acid prices have risen approximately 4% in Southeast and Far East Asia, 1.4% in North America, and 2% in Europe, as feedstock Palm Oil prices have increased by over 11% in Malaysia and Indonesia.

Looking ahead, prices of Stearic Acid are expected to continue rising due to ongoing challenges in Palm Oil production linked to El Niño and seasonal demand, which are likely to drive up production costs and increase import prices globally.