Rising Raw Material Costs Stages Bullish Outlook for Global Fatty Alcohol Prices

The global Fatty Alcohol market has witnessed a period of price stability in recent weeks despite recent market uncertatinty in upstream driven by lower palm oil stocks and tighter supply outlook.

While raw material palm oil prices have seen an uptick, the impact on downstream Fatty Alcohol has been minimal. Malaysia's palm oil stocks, though slightly higher than previous lows, remained lower in comparison to last year's levels. This coupled with Indonesia's planned B40 biodiesel scheme, which mandates a 40% palm oil blend in diesel fuel suggested a potential for future hikes in Fatty Alcohol pricing. Overall, the combination of lower palm oil stocks and anticipated tighter supply has helped maintain stability in the Fatty Alcohol market.

In China, the prices of Fatty Alcohol have remained stable this week. The stability has come in the midst of surge in feedstock palm oil prices. Indonesia, the world's largest palm oil exporter, has reported a projected decline in exports for 2024. Officials from the Indonesian Palm Oil Association (GAPKI) attributed this decrease to heightened domestic consumption due to increased biodiesel blending rates and a slight dip in production. In the USA and Germany too, the trend observed for Fatty Alcohol prices was likewise.

Considering freight, ocean freight faced challenges due to industrial unrest and capacity issues in key regions. The Canadian government resolved rail strikes in August and averted labor disputes in India, but unresolved issues in Germany and ongoing negotiations with US East Coast port workers posed further risks. A potential strike at US ports in October could lead to congestion and rising rates as shipments are diverted to the West Coast. Demand for ocean freight has lessened, but port congestion, equipment shortages, and rerouting around the Cape of Good Hope continued to strain supply. Freight rates have largely stabilized but remained higher than pre-pandemic levels. Seasonal rate reductions ahead of China's Golden Week and expected port strikes may impact Fatty Alcohol pricing, with potential rate increases in Q4 driven by peak season demand.

Overall, the combination of lower palm oil stocks anticipated tighter supply, and potential disruptions in ocean freight has contributed to the unstable market outlook for Fatty Alcohol.

As per ChemAnalyst pricing intelligence, the prices of Fatty Alcohol are expected to rise. The surge in Fatty Alcohol prices will likely be due to tighter supply of upstream palm oil. Early Q4 is expected to see active demand for Fatty Alcohol from the downstream detergent and surfactant industry. Also, palm oil prices will rise due to increased domestic consumption from other downstream consumer segment.