Oleic Acid Prices to Surge in June Amid Strong Demand and Supply Constraints

Market analysts project a substantial price elevation for Oleic Acid in the global marketplace throughout June 2024. This upward trend is attributed to a confluence of factors, including heightened demand from the oleochemical sector, supply chain limitations, and escalating production expenses. Both key exporting nations and major importing countries of Oleic Acid are preparing for this anticipated price surge.

Oleic Acid, a monounsaturated omega-9 fatty acid found in various animal and vegetable fats, plays a crucial role in numerous industrial applications. Its versatility makes it a key ingredient in the production of soaps, detergents, and emulsifying agents. The Oleic Acid is also widely used in personal care products, lubricants, and as a flavor enhancer in food processing.

Market analysts report that prices have been steadily climbing since mid-June in Malaysia and Indonesia, the two largest Oleic Acid-producing regions. This trend is caused by increased domestic and international demand, leading traders to buy actively at higher prices. The growing preference for oleochemicals as eco-friendly alternatives to petroleum-based products in various sectors has further intensified the demand for Oleic Acid. Supply-demand imbalance, with limited availability and moderate inventory, boosts prices. Rising production costs, driven by higher energy expenses amid global demand uncertainties, further fuel price increases.

The Malaysian palm oil market, a primary raw material source for Oleic Acid, has also experienced steady price increases. The upward trend in palm oil prices can be attributed to a confluence of factors. Increasing regional and international demand, coupled with palm oil's comparative advantage over other edible oils, has driven market momentum. Additionally, expectations of supply constraints from major producers Malaysia and Indonesia in late 2024 have further bolstered prices. Despite Malaysia's palm oil sector showing significant growth—with production rising by approx. 9% and exports increasing by approx. 7% from January to May 2024—the surge in demand has outstripped this expansion. Consequently, palm oil inventories in Malaysia have dwindled, contributing to the overall bullish market sentiment.

Oleic Acid prices in importing regions like Europe, Asia, and North America have surged recently and are expected to rise further due to upward trends in exporting regions. Escalating shipping costs are compounding these increases in Oleic Acid, disrupting purchasing plans and causing losses for both customers and suppliers. Global shipping faces challenges from a shortage of containers in China, exacerbated by geopolitical tensions and logistical imbalances. Rerouted vessels from Houthi attacks in the Red Sea worsen container shortages, with delays due to offloading at alternative ports. Supply chain bottlenecks, including Panama Canal droughts and reduced vessel traffic, are squeezing capacity and driving up transportation costs, impacting Oleic Acid prices amid soaring freight rates and extended lead times. As the Oleic Acid market navigates these complex dynamics, industry stakeholders are closely monitoring the situation, anticipating continued price volatility throughout June and potentially beyond.