Descending Upstream Costs Exerts Downward Pressure on the Global Fatty Acid Market

The downturn in the inquiries from the downstream personal care and detergent industries has crippled the market growth of Fatty Acid in the global region. The market sentiments across Europe and China have been under pressure due to a cascade of negative factors such as rising inflation, burgeoning energy costs, and COVID cases. However, as per the observed market scenario, the inflation in the USA has been edged lower because pandemic-related disruptions to supply chains are dissipating, easing the intensified pressure on the price of Fatty Acid and its derivative industries.

Malaysia, the world’s second-largest producer of Palm Oil, has been experiencing oversupplies amid a fall in demand from the top importing country, China, due to rising Covid cases. High inventories of upstream palm oil have reduced the operation rate of its downstream Fatty Acid derivatives in the Chinese domestic market. In addition, the ringgit, palm’s currency of trade, improved against the dollar, making the commodity cheaper for holders of other currencies. Furthermore, the cost support from crude oil has also weakened reported by local manufacturers.

On the other hand, the accumulation of the stocks and lackluster demand from the downstream surfactant and detergent industries has curtailed the positive development in the price of Fatty Acid in the German Market. The data has shown that the manufacturing index has already crippled in October as high energy costs levied its direct impact on the operational costs of Fatty Acid.

As per ChemAnalyst, the Fatty Acid market will sustain a downward trajectory in the international market. The downstream inquiries from the personal care and detergent sector are also inadequate to cause a significant rise in manufacturer’s quotations in the forthcoming weeks. However, the disruptions to palm oil supplies due to tropical storms in top producers Indonesia and Malaysia are expected to continue into the first quarter of 2023 and can keep the price strong for Fatty Acid and its derivatives.