Fatty Alcohol Market under Pressure with the Palm Oil Export Ban from Indonesia

The Fatty Alcohol prices rebounded this week in the global market on the back of unprecedented tight supplies of upstream Palm oil. The world's top producer, Indonesia, announced its export ban on Friday, which threatened the terminal demand fundamentals and caught the downstream detergent players off guard. The prohibition has started to impact the oil and fat market massively.

The global Palm oil supplies are already under strain because of export disruptions due to the accelerating Russia-Ukraine crisis, disappointing harvests, and continuing labour shortage issues. The feedstock Palm Oil July futures rose on Monday morning to the highest value since 11th March, adding to the worsening situation. After Indonesia's export ban announcement, the Crude Palm oil market witnessed around a 6 percent hike in prices and reached more than USD 1500 per ton. Being the second-largest Palm Oil manufacturer and exporter, Malaysia is to witness increased demand with Indonesia's move. However, the high export demand may not be fulfilled by Malaysia as the country is currently dealing with labour shortages. This imbalance between demand and supply fundamentals could further push Palm oil prices to soar in the coming weeks.  

The Malaysian CPO prices will shoot up significantly and potentially surge to new record highs caused by panic buying if the ban lasts more than a month. This month, the Crude Palm oil refiners might hold back their oil stocks to gain from the higher pricing after the Indonesian government lifts the ban. Conclusively, the downstream Fatty Alcohol prices showcased a hike of approximately 3 percent in the United States, 2.9 percent in Belgium, and 3 percent in Germany compared to the previous weeks, according to the ChemAnalyst database.

As per ChemAnalyst, "the prices of Fatty Alcohol are predicted to rise in the coming weeks across the global market on the back of soaring upstream Palm value and tightening supplies to the regional markets. Demand is likely to stay sky-high from the downstream detergent industry. Additionally, there is no sign of correction in palm oil prices after the Indonesian ban."