Limited Procurement from Downstream Sectors Diminishes the Market Growth of Fatty Alcohol
- 17-Jan-2023 3:42 PM
- Journalist: Li Hua
The prices of Fatty Alcohol have been tumbling in the global market. The economic slowdown spurred by rising inflation and volatile input costs has hampered the market sentiments for Fatty Alcohol in the regional markets. However, with China relieving COVID-19 restrictions, there has been an improvement in trade activities across the nation. Fatty Alcohol prices have been demonstrating a downward trend since the first week of January 2023, owing to easing supply chains. Fatty alcohol price realizations have also been under pressure because of the demand from the downstream surfactant and detergent sector, which has remained on the lower edge. Additionally, there were decreases in both freight costs and container shipments.
On the other hand, the manufacturing sector has witnessed a weaker improvement in operating conditions due to moderate demand from the surfactant and detergent sector in the German market. The firms have demonstrated a reduction in the backlog of orders as the number of fresh inquiries for Fatty Alcohol has increased at a slower pace. Furthermore, slowing sectors of the European economies and still-high inflation have been dragging on profits for Fatty Alcohol production companies. The ChemAnalyst database has shown that the Fatty Alcohol prices demonstrated a decrement of USD 65 per tonne last week compared to the cost observed in entering Q1.
The top palm oil exporter, Indonesia, has decided to restrict shipments and boost domestic biodiesel consumption by squeezing Palm Oil supplies, already undercut by lower output in Asia and North America. Additionally, last year, trade regulations in Indonesia, the country that produces more than half of the world's palm oil supplies, were tightened. Exporters are now only permitted to ship six times as much palm oil as they sell domestically instead of the eight-fold ratio that was previously allowed.
According to ChemAnalyst, soft inquiries from the downstream surfactant and detergent sector are likely to pressure the market growth of Fatty Alcohol in the regional markets. However, the weather uncertainty with the possibility of El Nino in the Indonesian market might disrupt the upstream Palm Oil supplies and compound the challenges for the Fatty Alcohol market in the forthcoming weeks.