India, the world’s largest edible oil importing nation, saw a significant decline in palm oil imports in December 2024, as soybean oil from South America gained market share. This shift, driven by more competitive pricing and changes in supply chains, reflects a broader change in the country’s oil import preferences and is expected to have ripple effects on the chemical industry, especially in terms of raw material sourcing and production processes.

According to the Solvent Extractors' Association of India (SEA), soybean oil imports surged to 420,000 tonnes in December 2024, up from just 152,650 tonnes the previous year. This remarkable rise can be attributed to the price disparity between palm oil and soybean oil, with soybean oil being offered at substantial discounts due to surplus supplies from South America. As Malaysian palm oil exports tightened, consumers turned to the more affordable soybean oil, easing the pressures on palm oil supplies, said SEA Executive Director B.V. Mehta.

In contrast, palm oil’s market share in India fell significantly, dropping to 42% in December 2024, while refined oils, including soybean and sunflower oil, collectively captured 58% of the market. This shift marks a noticeable trend towards diversification in India’s edible oil consumption patterns. Crude palm oil imports experienced a significant decline in December 2024, dropping by nearly half compared to the previous year. Similarly, imports of refined palm oil (RBD palm olein) and crude palm kernel oil also saw notable decreases. In contrast, sunflower oil imports showed a slight increase, maintaining steady demand. This shift highlights changing preferences in India’s edible oil consumption and a growing reliance on alternative oils.

Despite this change in the market, Indonesia and Malaysia remain the primary suppliers of palm oil to India, while soybean oil is predominantly sourced from South American countries such as Argentina, Brazil, and Russia. Additionally, crude sunflower oil continues to be imported mainly from Russia, Ukraine, and Argentina.

The impact of this shift in India’s edible oil imports extends beyond agriculture, with significant implications for the chemical industry. The reduction in palm oil imports may affect the availability of key raw materials for a variety of chemical products, including biodiesel, cosmetics, and food additives. Palm oil is an essential ingredient in numerous chemical processes due to its versatility and low cost. As demand for alternative oils like soybean oil rises, suppliers and manufacturers in the chemical industry will need to adjust to new sourcing practices and adapt to fluctuations in raw material costs. The increased use of soybean oil may also prompt changes in formulation and processing methods for chemical manufacturers, leading to potential innovation and adjustment in production strategies.

Overall, while India’s changing edible oil consumption trends signal a shift toward more sustainable sourcing and cost-effective options, the chemical industry must stay agile to address the evolving supply chain dynamics and its potential impact on product availability and pricing.