For the Quarter Ending June 2022
In North America, the Fatty Acid prices showcased mixed sentiments throughout the quarter of 2022 on account of slow demand from downstream sectors such as cosmetics, food, and personal care. Towards the starting of the quarter, the prices of Fatty acids remained on the upper edge as palm oil and coconut oil prices were high. Fatty Acid manufacturers faced supply shortages from Asian countries that as Indonesia and Malaysia. These countries restricted the export quantity of feedstock, palm oil increasing the gap between demand and supply chain in the regional market. Increment in feedstock prices led to a high production cost of Fatty Acids in the regional market. Towards the end of the quarter, the prices declined in the North American market as the manufacturers had ample feed to cater to the domestic market.
In the second quarter of 2022, the prices of Fatty Acids followed the uptrend in the Asian Pacific region. The key factors driving the market sentiments toward Fatty Acids include increased feedstock costs and palm oil in the regional market. Furthermore, the demand from downstream cosmetics, food, and personal care sectors remained active, proportionally governing the market sentiments toward Fatty Acids. Indonesia and Malaysia restricted palm oil export as the country faced product shortages in their domestic market. Furthermore, China faced lockdown restrictions halting the production of Fatty Acids in the domestic market. Demand from India, Japan, and South Korea remained brisk, governing the market sentiments of Fatty Acids in the regional market.
The second quarter of 2022 observed a fantastic hike in the prices of Fatty Acids in the European market on account of increased feedstock, palm oil, and coconut oil prices in the regional market. Asian suppliers restricted palm oil export, leading to a feeding shortage. The demand from downstream, soaps, cosmetics, and food sectors remained high throughout the quarter. The feedstock shortage occurred with the Fatty acid manufacturers as the supply chain was disrupted. Freight charges also remained high due to port congestion and vessel shortage in the domestic ports. This increased the production cost of Fatty Acids in the regional market
For the Quarter Ending March 2022
Being a heavily imported commodity, primarily from Indonesia and Malaysia, Fatty Acid pricing dynamics in Asia went to record heights and witnessed a bullish market scenario in the first quarter of 2022. The market fundamentals were stout against the surging demand for cleaning agents and personal care segments in the region on concerns over the omicron variant, which rapidly gained strength in China. Also, buying sentiments increased during the Chinese New Year and Beijing Olympics in early February. Players remained under cost pressure with increased raw material costs and constricted import volumes with export restrictions from Indonesia. Thus, the prices climbed steadily in China, reaching USD 6300/MT for Fatty Acid C8-C10 FOB Shanghai in March 2022.
In North America, the Fatty Acid prices surged upwards under pressure from the domino effect of feedstock Palm oil tightness in the overseas market. The Fatty Acid prices traded higher than contracts during Q1-2022 owing to soaring demand for cleaning agents. The supply-side constraints got enhanced by the continuing shortage of vessels from Europe due to the Russia-Ukrainian war, which led to supply disruptions in the international market. As a result, local downstream buyers had difficulty getting their hands on deliveries with container scarcity. Moreover, enhanced demand from the downstream personal care, cosmetic, and detergent industries brought prices to USD 1896/MT in March for Fatty Acid Stearic Acid Triple Pressed DEL USGC in the United States.
In Q1-2022, the European Fatty Acid prices maintained a bullish trend taking strong cost support from the feedstock Palm Oil prices, which kept on skyrocketing in the global market. The high freight costs on raw material deliveries caused by logistical constrictions and the catastrophic energy crisis in the region with the geopolitical tension between Russia and Ukraine exerted further pressure on the input costs, thereby worsening the woes of the market players. In the meantime, the market sentiments of the downstream surfactant sector remained healthy as the consumer-buying trends improved across the region, keeping the uphill pricing trend at USD 3950/MT in Germany during the first quarter of 2022.
Taking support from the rallying palm oil feedstock prices in the international market and their supply tightness owing to vessel delays from Asian countries, the prices of fatty acids peaked to the highest level during October. In addition to the high input costs, the despair of manufacturers elevated further in the initial weeks of the quarter with the scarce availability of trucks for dispatch of consignments to the downstream industries. Meanwhile, the downstream personal care and the detergents segments projected high demand fundamentals which outpaced the supplies. However, a brief fall in palm oil prices owing to improving port movements and a decline in freight charges capped the prices of fatty acid in the North American region in the later months. The bearishness intensified during the closing days of December as evident from the Fatty Acid prices falling to USD 1760/MT DEL, due to negligible downstream activity amid shutdowns in the Christmas and New Year holidays which led to a contraction in demand for fatty acid.
The Asian fatty acid market demonstrated bullishness from the strong palm oil feedstock performance in the global market due to low palm oil output in Indonesia and Malaysia. The logistical challenges in addition to the inflationary pressure on the fatty acid prices caused the traded offers to stay firm in India. In China, the low feedstock availability and the government’s “Dual Control Policy” driven production challenges caused manufacturing units like Jiangsu Shengtai (80 KTPA capacity) and Deyuan Gaoke (100 KTPA) to go offline for a certain period. While many manufacturing facilities went out of stock in mid-cut fatty alcohols during a major portion of the quarter, thus increasing the import appetite of the country. The demand from the detergent and the personal care sectors showed headwinds with downstream buyers posing ample enquiries for the product under the market optimism. The continued buoyancy in the market sentiments led the prices of Fatty Acids in India to hover around USD 3130/MT Ex-Ahmedabad and in China, the prices settled at USD 3440/MT on FOB basis during December.
The European Fatty Acid market in Q4-2021 continued displaying bullish traits in response to the inexplicably high input costs. The global shortage of palm oil feedstock, the delays in their delivery and the astoundingly high energy prices remained the major factors that exerted upward pressure on the input costs. The spot trading activities also received blows from the container scarcity at ports and imposed movement restrictions due to increasing Omicron cases in the region. Germany, which remained one of the highest-hit countries from the resurgence of Covid cases, witnessed a remarkable rise in the consumption of soaps and detergents that triggered a surge in enquiries for Fatty Acid by the downstream sectors and raised manufacturers sentiments for offering firm contract prices. The growing market restrictions towards the end of the quarter burdened the Fatty Acid supply dynamics in the downstream industries, in wake of which the prices in December reached the year’s highest values, settling at USD 4080/MT on FOB basis. The demand in the personal care sector also offered a fair share of contribution in the rising price trends.