Tallow Fatty Acid Prices Defy Expectations with a Rise in August 2024

The Tallow Fatty Acid market in China has been experiencing a delicate balancing act between rising prices and weakening demand. While prices have seen a marginal increase due to limited supply, the overall demand from the market has remained relatively stable.

The month of August has witnessed a significant decline in China's industrial activity, as factory gate prices plummeted and businesses struggled to secure orders. According to the National Bureau of Statistics, the Purchasing Manager Index (PMI) fell to 49.1 in August. This industrial slowdown led to a reduction in demand for Tallow Fatty Acid, which had various industrial applications.

Manufacturing companies reduced their production capacity in response to the declining demand, potentially exacerbating the supply tightness thus pushing prices higher. The interplay between rising prices and weakening demand created increased price volatility in the Tallow Fatty Acid market.

The devastating impact of Typhoon Gaemi on the industrial and transportation sectors in the affected regions has significantly disrupted the supply chain of Tallow Fatty Acid. The typhoon forced numerous industrial facilities, including those involved in tallow processing and refining, to temporarily cease operations. This halt in production led to a decrease in the overall supply of Tallow Fatty Acid.

The severe weather conditions created significant obstacles for transportation networks. Damaged roads, flooded areas, and disrupted shipping routes made it difficult to move Tallow Fatty Acid from processing facilities to markets. The logistics of transporting Tallow Fatty Acid became more complex due to the disruptions. 

The Asia-Pacific region continued to experience robust demand for ocean freight services, driven by strong exports from countries like China and Vietnam. However, the industry was grappling with several challenges, including rising freight rates, port congestion, and concerns about a potential slowdown in manufacturing activity. To offset the increased costs associated with port congestion and the need to carry loaded exports, major freight carriers have announced rate increases for July and August 2024. Despite these hikes, demand from Asia is expected to remain high throughout the third quarter, leading to full bookings on many trade routes.

While the current demand outlook looked positive, there was a risk of a supply-demand imbalance. An increase in supply capacity and concerns about weakening manufacturing activity could pose challenges to maintaining the current level of demand. Maersk has projected global container market volume growth in 2024 to be between 4% and 6%. Political protests in Bangladesh have led to a substantial backlog of containers, which is expected to further exacerbate ongoing congestion issues in Colombo, Sri Lanka. This situation will likely put additional strain on the regional supply chain and could lead to delays and higher costs for shippers.

According to ChemAnalyst's pricing intelligence, the domestic market for Tallow Fatty Acid will continue to experience upward momentum. Limited availability of Tallow Fatty acid, coupled with higher freight charges, will drive prices to the higher end. The ongoing supply chain disruptions and production challenges are likely to persist. Increased transportation costs due to various factors, such as port congestion, and supply chain challenges, will contribute to higher overall costs for Tallow Fatty Acid.