With strong feedstock prices, will the Fatty Alcohol market ease any further?

The price of Fatty Alcohol in the global market started to decline with weak buying sentiments, despite high feedstock prices. According to the ChemAnalyst database, Fatty Alcohol prices dropped nearly 1% in the North American region last week, while the Indian market fell around 3% this month.

The United States stands to be a major net importer of Fatty alcohol in the overseas market. With Indonesia's export restrictions lifted, the oil palm complex has experienced a downward correction, which may encourage additional participants to expand their consumption of palm oil and PKO in the coming weeks.

However, the market's demand continued to grow due to increasingly buoyant supply chain conditions. Soaring Crude oil prices indirectly pressured feedstock fats and oils markets in all the regions. Regardless of Indonesia's export restrictions lifted, United States' production margins are still being squeezed by rising energy and feedstock costs. Squeezed production margins in the US have prompted regional players to lower operating rates, even with pre-existing financial concerns such as expensive shipping equipment and freight prices. The Russia-Ukrainian continuous conflict threatens to put even more pressure on imports, as transportation equipment and vessel space become scarcer because of the supply chain disruptions from eastern Europe.

Given the overall supply shortage in the United States, domestic natural and manufactured C18 Fatty Alcohol is also scarce. Concerns about US Customs and Border Protection's (CBP) enhanced scrutiny on Malaysian-origin products persist in the wider market, with isolated cases of imports being refused or detained continuing to be heard.

On the bright side, ExxonMobil's development of the new linear alpha olefins (LAO) manufacturing unit at its Baytown, Texas, integrated petrochemical complex is progressing, and the commercial start-up is expected in mid-2023. The new factory will produce roughly 350,000 metric tons of LAO yearly once it is fully operational.

As per ChemAnalyst, "Fatty Alcohol prices may stay down in the coming weeks with the less consumer spending habits and reliance on lower-cost options because of rising inflation in the United States. No sign of decline can be expected in the feedstock Palm Oil prices globally. Furthermore, the expansion of US synthetic alcohol manufacturing facilities could create increased competition in the downstream Fatty Alcohol market."