Amidst Limited Supply and Rising Upstream Costs, European Fatty Alcohol Prices Settle Higher in early May 2024

Hamburg (Germany): In the European market, challenging economic conditions have continued to affect key chemicals like Fatty Alcohol. In 2024, persistent inflation has reduced the purchasing power of industries using Fatty Alcohol, weakening its market fundamentals. Lower manufacturing rates have also tightened supply, impacting Fatty Alcohol in Europe. Furthermore, disruptions in the Red Sea have increased freight charges between Asia and Europe, raising shipping costs for Palm Oil, crucial for Fatty Alcohol production.

According to the ChemAnalyst database, Fatty Alcohol prices in Germany rose by about USD 100 per ton in the week ending May 3rd.  Prices have been consistently rising in Germany due to lower manufacturing rates, leading to limited stock availability. Reduced Palm Oil stocks in Indonesia and Malaysia have also driven up Palm Oil prices. Despite efforts, the Indonesian Palm Oil industry struggles to meet European and U.S. regulations. However, demand from the Personal Care industry has remained average due to mostly small orders. Additionally, increased wage demand has further fueled tight labor conditions in the domestic region. On the input energy front, the rising Crude Oil prices after the production cut decision taken by OPEC+ members have compounded market challenges concerning the direction of inflation and the appropriate amount of interest rate increase for maintaining market balance.

On the other hand, in Malaysia, the prices of Fatty Alcohol maintained a stagnant trend in early May 2024. However, the prices have maintained their bullish run throughout April, amid an increase in downstream demand and rising raw material costs. Furthermore, there has been an increase in demand from the Personal Care industries, which has also contributed to the higher prices of Fatty Alcohol. To maintain market equilibrium, existing inventories have been utilized, and new production has been initiated. Manufacturing activities have expanded in Malaysia in response to improved market conditions, with production facilities operating at sufficient rates to balance the market. Additionally, demand from importing nations, particularly China, has increased, further boosting Fatty Alcohol prices. The combination of strong domestic demand and significant interest from importing countries has led to the price hike.

According to the pricing intelligence of ChemAnalyst, the prices of Fatty Alcohol might inch higher, amid an escalation in the upstream Palm Oil prices in the second quarter of 2024. In addition, following the conclusion of the May Holidays, the demand for Fatty Alcohol from China is also anticipated to pick up, strengthening the market fundamentals of Fatty Alcohol. Moreover, amid an expected slowdown in inflationary pressures, the market players would be willing to restock their inventories to meet the demand from the terminal Personal Care industries.