Fatty Alcohol prices rising due to limited supply of palm oil
- 10-Mar-2022 7:05 PM
- Journalist: Gabreilla Figueroa
Suppressed supplies of upstream palm oil have kept the prices of its derivatives like Fatty Alcohol in an upward trajectory since February. The supply in North America further dwindled with US Customs and Board Protection Council (CBP) curbing palm oil shipments from Malaysia under several moral obligations. Palm oil cargoes from Malaysia were seized as it was suspected that the material was manufactured by forced labour.
Demand for Fatty Alcohol in the USA has remained robust amid the requirement for surfactants by essential cleaning industries. On the other hand, prolonged tightness in the supplies of vegetable oil due to the rise in soybean prices and supply chain disruption amid the ongoing Russia-Ukraine tensions has escalated the shortage in the global market.
As feedstock Palm oil is mainly imported from Indonesia and Malaysia, a series of disruptions in the supplies from these two countries have directly affected the prices of Fatty Alcohols in the global market. Indonesia has recently induced curbs on the export of palm oil to reserve enough quantity for the domestic market. Exports from Malaysia have also increased exponentially as traders began to stockpile amid the expectations of further supply disruptions due to geopolitical tensions.
Currently, the US market of Fatty Alcohol has been facing severe challenges under prevalent demand from the surfactant segment despite the scarce supplies from the major exporting countries. Bullish feedstock costs have been adhering to a constant upward pressure upon the prices of Fatty alcohol in the US.
Fatty Alcohol prices in the USA have already surged by 2.3% in February. Discussions of contract deals for Fatty Alcohol in Q2 have been heard at a high premium amidst the existing supply concerns. Some players were heard having enough volumes to carry over in Q2, while some of them have been heard hedging to safeguard their margins amid the existing geopolitical uncertainties. As per ChemAnalyst, “Feedstock costs are expected to further suppress manufacturers margins which would lead to another rise in its prices in the near term.”