For the Quarter Ending December 2023
Moving towards the last quarter of 2023, the North American Castor Oil market underwent several influences shaping its overall trajectory. Initially, there was a general market improvement, marked by increased demand and off-takes from the downstream sector. This heightened demand was fueled by factors such as a growing awareness of Castor Oil's industrial applications and a shift towards sustainable alternatives. Moreover, constrained supplies from major exporting countries and a surge in energy costs played a role in driving prices upward, especially in the US market.
However, as November 2023 unfolded, Castor Oil prices experienced a notable downturn. This decline was primarily attributed to a global reduction in downstream consumption and a decrease in new quotations from the regional market. Additionally, the global price drop from major exporting regions, notably India, further influenced the dynamics of the Castor Oil market in the USA, aligning with the prevailing trend as the country functions as an importer.
The significant drop in prices observed in key APAC regions, particularly in Indian provinces, had a widespread impact on overall pricing within the USA, affecting major players in the Castor Oil market. This trend persisted until the final week of December, indicating an ample supply of downstream products, catering to the increased inquiries and contributing to a noticeable decline in transaction volume within the market for the month. As a result, the price for Refined Castor Oil (FSG Grade) at the quarter's end in the USA was recorded at 1690/MT.
In Q4 2023, the APAC Castor Oil market saw prices decline until November, rebounding significantly by December's end. The drop was linked to reduced domestic downstream demand and a lack of new inquiries. Manufacturers adjusted output to match demand, leveraging product abundance. India, a major exporter, cut prices due to lower production costs influenced by declining crude oil prices. Furthermore, the downturn was attributed to an unexpected influx of castor seeds, particularly in Rajasthan and Gujarat, driving a correction. November's lower-than-expected castor oil exports led to a notable spot market price drop. This shortfall was linked to economic slowdowns in major importing countries like China, as well as a sluggish pace in certain industries dependent on castor oil, resulting in reduced demand. Towards the end of Q4, prices rebounded considerably, settling at USD 124,800/MT in India. This resurgence was supported by a sudden increase in offtakes for castor oil in sectors such as biodiesel, soaps, cosmetics, and lubricants, along with rising import demand from international markets like France, South Korea, China, and others, contributing to tighter domestic supply and higher prices. Additionally, as large quantities of harvested seeds entered the market, the need for additional storage facilities increased. Trade activity mainly revolved around regional inquiries. Merchants are expected to focus on further increasing their stock levels to meet the continuous rise in downstream consumption in the upcoming period. Conversely, in importing nations, particularly in China as a significant importer, the market followed a similar trend to exporting nations, with prices settling at USD 1,555/MT as December concluded.
Across the European region, particularly in the Netherlands, the castor oil market witnessed a declining trend throughout the fourth quarter of 2023, reaching its lowest point in November before experiencing a significant rebound in December. Initially, this downward trend was driven by a weakening price trend in key exporting nations, notably India. Moreover, as off-takes from downstream sectors continued to decrease in October following a decline in September, local manufacturers responded by lowering their selling prices to clear stockpiles within the domestic market. Subsequently, in November, the Consumer Price Index (CPI) in the Netherlands dropped from 127.73 points in October to 126.40 points, reflecting a decrease in downstream procurement activity for castor oil, particularly in the food industries. Despite subdued purchasing sentiments in the domestic market and hesitancy among market participants to place new orders due to ample supply, the overall market sentiment remained pessimistic. Contrary to this, as December concluded, the Netherlands experienced a modest upturn compared to the previous month. This positive shift can be attributed to increased consumer purchasing activity, especially towards the end of the year. The end-user sector saw a notable resurgence in demand for castor oil, contributing to a subsequent increase in prices. Additionally, global supply chains faced persistent challenges, including container shortages, port congestion, and geopolitical tensions related to the Red Sea dispute. These challenges led to delays in castor oil shipments, impacting inventory levels in Europe and influencing the overall pricing dynamics in the market. As a result, by the end of December, the price of Refined Castor Oil (FSG Grade) in the Netherlands settled at USD 1590/MT.
For the Quarter Ending September 2023
In the North American region, particularly within the United States, the Castor Oil market experienced a varied outlook throughout the third quarter of 2023. According to the analysis of market participants, the US Census Bureau reported a moderate increase in the Manufacturing Purchasing Managers' Index (PMI) for the United States, rising from 46.3 in June to 49 in July. This signifies two consecutive months of PMI exceeding 50, indicating growth in the manufacturing sector. Concurrently, the consistent rise in Castor oil consumption across sectors like food, personal care, and other industries led to an increase in its price. Moving into August, Castor oil prices significantly dropped in the United States due to various factors, including the strengthening of the US dollar against the Indian Rupee, making imports from India more affordable for US buyers. Moreover, the demand for Castor oil surged in August 2023, driven by hot weather and increased usage of personal care products. This heightened demand encouraged Indian exporters to ship more Castor oil to the USA. Despite export restrictions, Indian exporters utilized alternative shipping routes to bypass government scrutiny, allowing them to export larger quantities of Castor oil and subsequently driving prices downward. However, as September approached, prices rose once more, indicating an overall upward trend in trade momentum with a consistent increase in import activity. Ultimately, by the end of September, the cost of Castor Oil stood at $134000 per metric ton.
During the third quarter of 2023, Castor Oil prices exhibited a positive market trend, particularly in the APAC region, notably in India, a major global exporter. The continuous upward trajectory of Castor Oil prices can be attributed significantly to the robust global demand, which remained strong throughout Q3. This demand surge was primarily propelled by growth in both the food and industrial sectors. Castor oil, known for its versatility, is a key ingredient in a wide array of products, such as biodiesel, soaps, cosmetics, and lubricants. Additionally, the excessive rainfall experienced in July motivated farmers to expand Castor cultivation this season. Furthermore, the prices of Castor seeds, the raw material for Castor Oil, fluctuated due to reports indicating an increase in Castor cultivation in specific regions of India. Sowing activities for Castor seeds also showed positive trends. Moreover, the heightened demand for Castor oil consistently maintained prices on the higher side throughout the quarter. Adding to this, a persistent rise in downstream consumption and importing offers for Castor oil resulted in less availability among the market participants. As a result, the global supply of Castor oil has diminished, leading to a rise in prices. Additionally, the escalating energy costs have also played a role in the increased prices of Castor oil. Energy is a fundamental component in the production and transportation of Castor oil, and the surging energy expenses have elevated the overall production costs, further impacting the prices in the market.
In the European region, particularly in the Netherlands, Castor oil prices mirrored the market trends seen in the Asia Pacific region, notably India. Throughout Q3, the demand for Castor Oil in the food and pharmaceutical sectors in Europe continued to rise. This increased demand was evident in various industries, such as personal care products, food additives, and industrial lubricants, leading to a consistent uptick in supply offers from India, a major global exporter of Castor oil. Additionally, the imposition of export restrictions on Castor oil by Indian exporters in July 2023 significantly reduced its global supply, further driving up prices in Europe. Moreover, the recent weakening of the euro against the US dollar has made Castor oil imports more expensive for European buyers, compelling them to pay a higher amount in euros to purchase the products. Towards the end of Q3, specifically in September 2023, the Netherlands experienced a Consumer Price Index (CPI) inflation rate of 0.2 percent, as reported by Statistics Netherlands. The CPI increased to 129.90 in September 2023, up from 129.25 in August 2023 and 125.63 in September 2022, indicating a year-on-year increase of 3.4%. Consequently, by the end of September, Castor oil prices in the Netherlands had reached $1730 per metric ton.