Bullish Upstream Prices Push Fatty Alcohol Prices Northwards in Late Q1 2024

Hamburg, Germany: The Fatty Alcohol prices have been demonstrating an upward trend in the regional market for the past few weeks. Global palm oil output plateauing and expanded biodiesel mandates have been restricting the availability of Palm Oil this year. Additionally, for the past few quarters, manufacturing firms have been operating at reduced rates in the wake of challenging economic conditions across the German market. As a result of low operating rates, manufacturing firms have faced increased supply-side pressures due to limited availability of finished goods.

The ChemAnalyst database has shown that the prices of fatty Alcohol have witnessed an increment of USD 60/MT in the week ending 22nd March compared to the prices observed at the start of this month. Market sources attribute the rise in prices to the increase in upstream Palm Oil costs. Malaysian palm oil futures continued to climb, driven by higher crude oil prices, despite gains being limited by a stronger ringgit. However, demand from downstream Personal Care industries was reported to be slower than expected.

Additionally, according to market sources, Clariant, a leading manufacturer of Fatty Alcohol, reported a mixed financial performance for Q4 2023. While sales increased by 4% compared to the previous quarter, there was a 14% decline year-over-year. Market sources have also reported that German manufacturing firms are pessimistic about future activity, citing economic weakness and domestic political factors as potential limitations.

Furthermore, after the Spring festival holidays in China, terminals were interested in raising their production levels as demand for Fatty Alcohol from terminal industries has been picking up pace. The reduction in inflationary pressures across Western markets is also aiding in easing Fatty alcohol market sentiments.

As per the pricing analysis conducted by ChemAnalyst, it is anticipated that the prices of Fatty Alcohol will persist at elevated levels. The demand for Fatty Alcohol from downstream Personal care industries is also anticipated to inch higher amid an improvement in consumption levels. Additionally, Palm oil production is forecasted to experience its slowest annual growth in four years during 2023/24, with an expected increase of only 0.2 million to 0.3 million metric tons. This stagnation is primarily due to Indonesia and Malaysia, the two largest producers, whose outputs are projected to remain flat this year. The reduced production of upstream Palm Oil is likely to keep its prices buoyant, offering positive cost support to the manufacturing costs of Fatty Alcohol in the forthcoming weeks.