For the Quarter Ending June 2024
North America
In Q2 2024, the North American Tallow Fatty Acid market faced a combination of challenges and stability. Demand from downstream industries, such as personal care and cleaning products, remained average. However, production costs were pressured by higher wage demands and tight labor conditions. Despite these challenges, the steady supply of raw materials helped mitigate some cost pressures. The ongoing geopolitical tensions and conflicts added a layer of uncertainty, impacting market sentiments and procurement strategies.
Furthermore, in mid-Q2, tight monetary policies across the USA, driven by the Federal Reserve maintaining the federal funds rate at 5.25%-5.50% amid persistent inflation and a tight labor market, limited economic activity and purchasing power, leading to cautious procurement practices.
Despite these headwinds, the availability of upstream raw materials was sufficient to meet the moderate demand from downstream industries. With no major turnaround in procurement volumes, the operating rates of manufacturing firms remained under pressure. The absence of significant disruptions, such as plant shutdowns, ensured stable supply chains throughout the quarter. Overall, Q2 2024 for Tallow Fatty Acid was marked by average demand, rising production costs, and economic challenges, resulting in a stable yet challenging market environment.
APAC
In Q2 2024, the Tallow Fatty Acid market in the APAC region experienced a notable increase in prices, driven by a confluence of factors. The quarter was marked by heightened manufacturing costs due to rising energy prices and increased freight rates, which created upward pressure on the Tallow Fatty Acid market. Additionally, the market was influenced by a tightening supply chain as numerous downstream manufacturers undertook maintenance activities, leading to reduced production rates. As a result, there was a scarcity of finished goods, further exacerbating the price hikes. The economic recovery in the region, coupled with proactive fiscal policies, also spurred demand, particularly from the personal care sector.
In China, this trend was especially pronounced, with significant price movements reflecting the broader economic dynamics. The quarter saw a marked increase in prices, influenced by moderate production during public holidays and high raw material costs, prompting some producers to initiate maintenance to mitigate inventory burdens. The Tallow Fatty Acid market in China displayed seasonality, with a notable correlation in price changes throughout the quarter.
The overall pricing environment in Q2 2024 remained positive, driven by consistent demand and strategic maintenance activities. The quarter concluded with Tallow Fatty Acid prices at USD 1450/MT FOB Shanghai, reflecting a robust market sentiment. No specific plant shutdowns were reported during this period. This ascending trend is indicative of a bullish market outlook, characterized by firm demand and constrained supply.
Europe
In the second quarter of 2024, the Tallow Fatty Acid market faced numerous challenges. Demand from major downstream sectors, such as personal care and cleaning products, remained weak, which negatively affected the overall market outlook. The slow recovery in the personal care industry, along with sluggish economic activity, kept demand for Tallow Fatty Acid below expectations.
However, A significant factor that eased production costs was the decline in natural gas prices, which reduced overall manufacturing expenses and helped offset some economic pressures. Despite these favorable conditions, the market faced challenges due to stringent monetary policies that suppressed economic activity and limited purchasing power. This environment led to cautious procurement practices and a conservative approach by manufacturers.
Despite these challenges, the supply of upstream raw materials, including tallow, was sufficient to meet the limited demand from downstream industries. However, the operating rates of downstream manufacturing firms had not returned to pre-pandemic levels, contributing to the overall weak demand. In summary, Q2 2024 for Tallow Fatty Acid was characterized by subdued demand, and economic challenges, creating a difficult market environment.
For the Quarter Ending March 2024
North America
In the first quarter of 2024, the market for Tallow Fatty Acid in North America, specifically the USA, experienced a pricing environment influenced by various factors. While the overall trend for the quarter showed a slight increase in prices, several factors contributed to this dynamic. Reduced market operations during the winter season and limited availability of finished goods were key drivers of the price increase.
Furthermore, the decline in U.S. crude oil inventories supported the upward shift in price realizations for Tallow Fatty Acid. Challenges faced by the market included the impact of the ongoing destocking season and the cautious approach of manufacturers due to lower operating rates. However, Improved inquiries from downstream industries, particularly Personal Care, also played a role in driving prices up.
Manufacturers maintained high prices to preserve profit margins amid active downstream demand, bullish upstream prices, and limited stock availability. Overall, the pricing trend for Tallow Fatty Acid in Q1 2024 showed a year-over-year increase compared to the same quarter last year and a slight increase compared to the last quarter of 2023.
APAC
In Q1 2024, the pricing dynamics of Tallow Fatty Acid in the APAC region, particularly in China, witnessed a nuanced trend. While the overall market situation remained bullish, with limited supplies and steady demand from the downstream Personal Care industries, the pricing dynamics were influenced by various factors beyond the conventional top three.
The low production activities during the year-end, coupled with the Spring Festival Holidays in China, led to reduced availability of finished goods, creating scarcity in the market and pushing prices higher. Safety inspections of coal mines further tightened the domestic coking coal supply, adding to the manufacturing costs of Tallow Fatty Acid. Additionally, the congestion at the Red Sea due to the fallout between Israel and Hamas resulted in increased transit times and escalated freight rates, impacting the overall market sentiment.
Overall, Compared to the same quarter last year, there was an increase in prices, driven by limited supplies and steady demand. Ultimately, the final quarter's price for Tallow Fatty Acid FOB Shanghai in China stood at USD 1395/MT.
Europe
In the first quarter of 2024, the market for Tallow Fatty Acid in Europe experienced a mixed pricing environment. Overall, prices remained relatively stable with minimal changes observed. Several factors influenced market prices during this period. Demand from downstream industries, particularly in Personal Care, was subdued, leading to weak market sentiments. This lower demand impacted pricing dynamics, although the overall market remained stable.
On the supply side, the operating rates of Tallow Fatty Acid manufacturing firms faced pressure due to tepid demand from terminal industries. Some companies initiated scheduled maintenance during this period to manage inventory pressure. However, the availability of Tallow Fatty Acid remained adequate to meet demand.
Factors such as abundant gas inventory levels helped ease supply concerns and lowered European gas prices, indirectly affecting the cost of production for Tallow Fatty Acid. In terms of price trends, Germany experienced significant changes compared to the previous quarter, starting with lower prices that gradually increased towards the end of the quarter. Overall, the market for Tallow Fatty Acid in Europe during the first quarter of 2024 was characterized by a mixed pricing environment, with stable overall prices influenced by factors such as subdued demand and supply dynamics.
For the Quarter Ending December 2023
North America
During the fourth quarter of 2023, the prices of Tallow Fatty Acid in the USA initially rose but later declined in December, primarily due to the destocking season. This pattern mirrored the movement in demand from the downstream Personal Care industries, which also experienced a similar fluctuation.
Manufacturing firms faced challenges in maintaining their operating rates amidst persistent inflationary pressures. Although demand from the downstream Personal Care industries fluctuated, it did not provide sustained support to the operating rates of these firms.
The destocking season in December led to a decrease in demand for Tallow Fatty Acid, as downstream industries reduced their inventory levels. This demand reduction contributed to the decline in prices observed during this period. In November, exports decreased as a result of weakened global demand, as reported by the US Commerce Department. Both domestic and international markets have slowed down, partly because central banks worldwide have implemented substantial interest rate increases since 2022 to address elevated inflation levels. However, the US Federal Reserve has opted to maintain its policy rate within the range of 5.25-5.50% and has indicated the conclusion of its significant monetary policy tightening.
APAC
The APAC region experienced a challenging quarter for Tallow Fatty Acid pricing in Q4 2023. The market was impacted by several significant factors. Firstly, the limited availability of finished goods puts pressure on manufacturers, leading to price adjustments. Secondly, the demand from downstream Personal Care industries remained low to moderate, resulting in average inquiries and small order sizes. In terms of plant shutdowns, no specific incidents were reported during this quarter. Among the APAC countries, China witnessed notable changes in Tallow Fatty Acid prices. The domestic market saw prices remaining on the higher end due to the limited availability of finished goods. However, the demand from downstream industries in China, particularly the Personal Care sector, remained subdued. This, combined with the destocking season, led to manufacturers focusing on clearing existing inventories rather than increasing production levels. The market sentiment was also affected by the decline in crude oil prices, which further decreased the manufacturing costs of Tallow Fatty Acid. The latest price for Tallow Fatty Acid FOB Shanghai in China at the end of the quarter was USD 1390/MT.
Europe
In Germany, the prices of Tallow Fatty Acid remained relatively low throughout the fourth quarter of 2023, with a further decrease observed in December, largely due to the traditional destocking season. This trend in pricing was reflected in the demand patterns from downstream Personal Care industries, which also experienced a decline during the same period. Manufacturing firms faced challenges in maintaining their operating rates amid persistent inflationary pressures. However, the reduction in natural gas prices contributed to a decrease in the manufacturing costs of Tallow Fatty Acid, providing some relief to producers. n addition, amid the downbeat outlook due to the underwhelming performance in recent quarters, many prominent domestic chemical plants have synchronized their scheduled maintenance shutdowns as the demand from the downstream industries has remained lackluster. In December, the inflow of inquiries from the downstream Personal care industries has remained weak. Consequently, the Tallow Fatty Acid market was subdued, with producers focused on meeting existing contractual obligations and limited overall activity. inflation rates in both the EU and the eurozone have consistently exceeded the European Central Bank's (ECB) medium-term target of 2%, pressuring the purchasing power of the end-use industries on a broader level.
For the Quarter Ending September 2023
North America
Tallow fatty acid prices in North America experienced a generally upward trend during the third quarter of 2023. Prices started off relatively stable in July but gradually increased throughout the rest of the quarter. This upward trend was primarily driven by strong demand from various industries, including personal care, cosmetics, and pharmaceuticals. Demand for tallow fatty acids remained robust across various industries, particularly personal care, cosmetics, and pharmaceuticals. The personal care industry, in particular, saw increased demand for tallow fatty acids due to the growing popularity of natural and organic products. The supply of tallow fatty acids remained relatively constrained due to factors such as reduced cattle slaughter and increased demand from the renewable diesel industry. This limited supply further supported prices.
APAC
Tallow fatty acid prices in Asia exhibited a mixed trend during the third quarter of 2023. Prices initially declined in the first half of the quarter due to weak demand from downstream industries, particularly the soap and detergent industry. However, prices rebounded in the second half of the quarter due to rising feedstock costs and supply chain disruptions. Demand for tallow fatty acids from the soap and detergent industry was subdued due to the effects of El Niño, which caused uneven rainfall patterns across South and East Asia. However, tallow fatty acid prices declined again towards the last couple of weeks of September. Thus, after the conclusion of Q3, Tallow Fatty Acid prices were assessed at USD 1400 per MT FOB Shanghai.
Europe
Tallow fatty acid prices in Europe experienced an upward trajectory during the third quarter of 2023, with prices increasing by approximately 10% from July to September. This upward trend was primarily driven by a combination of factors, including demand for tallow fatty acids, which remained strong across various industries, particularly in the personal care, cosmetics, and pharmaceuticals sectors. The growing popularity of natural and organic products further fueled demand for tallow fatty acids in these industries. The supply of tallow fatty acids was relatively constrained due to factors such as reduced cattle slaughter and increased demand from the renewable diesel industry. This limited supply contributed to higher prices. Production costs for tallow fatty acids also increased during the quarter, driven by factors such as rising energy and labor costs. These increased costs were passed on to consumers in the form of higher prices.
