Tallow Oil Prices Show a Downtrend in Germany Amidst Declining End-Users Demand

The prices of Tallow Oil declined in July 2023, following the previous month's trend. The factors responsible for this downward trend were decreased demand from end-consumers amid sufficient inventory among market manufacturers and traders. 

Tallow Oil is referred to as the animal oil that is obtained from rendered beef tissue but can consist of other animal fat as well. The majority of Tallow Oil is derived from cattle and is a by-product of the meat processing industry. Traditionally, it has been used in food preparation– as an ingredient and cooking oil. Vegetarianism and veganism became very popular in Germany, which caused consumers to switch to plant-based alternatives due to ethical reasons, health advantages, and environmental awareness. This decreased the demand for animal-derived products and kept the Tallow Oil prices on the lower side.

Inflation in Germany slowed down slightly and settled at 6.2% in July from 6.4% in the previous month, as per the Federal Statistical Office (Destatis). In the food sector, the cost of cooking oils and fats was 12.9% lower than a year previously, explaining the fall in prices of Tallow Oil. Moreover, the interest rate raised by the European Central Bank to tackle inflation further supported the decrease in demand for Tallow Oil in the market.

Germany is a major exporter of Tallow Oil in the world. In July, the appreciation of the Euro against the US dollar decreased the export volume from Germany, which increased the availability of Tallow Oil in the German domestic market, adding downward pressure on prices. In addition, extreme weather and heatwaves in Germany affected the transport network, which diminished consumer confidence and reduced sales, supporting the downward trend.

At the start of the third quarter, Germany's manufacturing sector struggled with challenging business conditions. Germany's manufacturing Purchasing Managers' Index (PMI) dropped to 41 in July from 43.6 in June, marking its lowest level in 38 months. This drop indicates the third consecutive month of a decline in manufacturing production, with July recording the steepest drop since May 2020. The manufacturing sector's decline accelerated as goods producers saw a sharper drop in new orders, factory gate prices, and output and input costs in July. The sharp decrease in demand can be attributed to a variety of factors, including customer hesitancy and destocking. Economic and geopolitical uncertainty, along with tighter financial conditions, also contributed to the downturn in demand. This resulted in a sharp and accelerated reduction in international sales. 

As per the ChemAnalyst analysis, the prices of Tallow Oil are expected to increase in upcoming months due to a rise in demand from end-user food and cosmetic industries. In addition, stable interest rate and better trade activities might support to create positive market sentiments for Tallow Oil.