European Stearic Acid Market shows bullish outlook, as Consumption from Downstream Heightens
European Stearic Acid Market shows bullish outlook, as Consumption from Downstream Heightens

European Stearic Acid Market shows bullish outlook, as Consumption from Downstream Heightens

  • 07-Mar-2024 2:58 PM
  • Journalist: Sasha Fernandes

Prices of Stearic Acid (Tripple Pressed) have appreciated by around 2% across the European market due to an increment in the prices of the product across the exporting market Malaysia. Prices of Stearic Acid (Tripple Pressed) were recorded to have appreciated by more than 2% in the Malaysian market due to increasing prices of feedstock Palm Oil, which appreciated by more than 3% in Malaysia.

Increments in the prices of feedstock Palm Oil were primarily attributed to off-season cultivation, erratic weather conditions because of El Nino, and poor farming practices which led production of Palm Oil to decline 33% on an annual basis, consequently low availability of feedstock occurred to produce Stearic Acid. Moreover, Malaysian exports of Palm Oil further declined by approximately 18% on an annual basis.

Stearic Acid demand in Germany and the Netherlands was recorded to have been healthy due to favorable automotive sales, particularly in the EV segment. The European Union's revised emission regulations have pushed demand for Stearic Acid from automotive parts and manufacturing sectors. Recently, new passenger car registrations in Germany and the Netherlands increased by 5.5% and 5.4%, respectively consequently pressurizing the inventories of Stearic Acid due to heightened demand of rubber. High freight charges, despite a 17% decline, remain 177% higher than threshold limit.

In terms of manufacturing activities, the overall manufacturing sector of the Eurozone suffered a significant downturn, in terms of total manufacturing activity, the rates of reduction in manufacturing output and new orders quickened in the middle of the first quarter of 2024. As businesses reported declining backlogs of work and lowered prospects for activity in the upcoming year, factory job losses continued to worsen. A lack of demand throughout supply chains caused input prices to continue declining and lead times for purchases to shorten, even though delays in arrivals of shipments and increments in transportation costs die due to ongoing crisis at Red Sea being reported. Purchase prices continued to decline due to declining input demand, and in February 2024 they entered deflation territory for the thirteenth consecutive month.

Overall, prices of Stearic Acid are anticipated to continue increasing in March 2024 as demand from the downstream soap and detergent industry is likely to strengthen due to the advancing termination of the winter season. The primary demand for Stearic Acid is also expected from the rubber industry and is also expected to strengthen as demand from the automotive industry is likely to bolster. This may further be complemented by the low supplies of feedstock Palm Oil across the Malaysian market which is expected to increase production costs of Stearic Acid.

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