How global food oil crisis hampered the American Stearic acid market
- 01-Apr-2022 6:54 PM
- Journalist: Nicholas Seifield
The price trend of Stearic acid in the US is rising due to higher export prices from the two highest exporters of Stearic acid and upstream palm oil (Malaysia and Indonesia). The demand from the downstream industries like personal care and leather is usually high in the US market because it has the most significant consumer base for both the leather and personal care industry.
Malaysia and Indonesia were majorly exporting Stearic acid and upstream palm oil to the United States and other major Asian markets (India and China). The Russia-Ukraine war continues to disrupt the export and import of Sunflower seed oil (Ukraine is the largest producer of Sunflower seed). The global market turns to palm oil as a substitute for sunflower seed oil demand which puts more pressure on the production capacity of Malaysia and Indonesia. In December 2021, Malaysia faced severe floods, and the Indonesian government decided to limit palm oil to control its carbon emission. The aforementioned factors have already increased the price of palm oil, add to that, the need for substituting the palm oil with the sunflower seed oil market has worsened the price hike of palm oil, resulting in a surge in Stearic acid prices. The US market has suffered the most from this price hike which added to the woes of the importers who have already been hit by higher freight charges on shipments from Southeast Asia.
The US depends not only on imports; it also manufactures its stearic acid, unlike its Asian counterparts. The US majorly produces stearic acid from tallow oil instead of palm oil. The demand for tallow oil has also improved with the rise in the production of electronic products, and automated fabrication which in turn increased the stearic acid prices in the United States.
According to ChemAnalyst, stearic acid prices are likely to continue their upward trend due to high demand from the American personal care sector and cost pressure from price hikes on imported palm oil.