For the Quarter Ending March 2024
North America:
In North America, especially in the United States, the castor oil market kicked off the first quarter with a downward trend, followed by a slight uptick in February and ending on a positive note in March. Initially, in January 2024, the USA, a key importer, took steps to boost its global competitiveness. This resulted in downstream processing companies adjusting their procurement strategies due to higher stockpiles, leading to an overall downward trend. Demand from downstream industries remained sluggish, prompting merchants to focus on clearing their stocks at reduced prices. Additionally, trading activity in the country was subdued, with rising freight charges ahead of the Red Sea disputes causing significant delays in consignments and higher shipping costs, discouraging traders from issuing new quotations and focusing on trading existing inventories.
However, as the quarter progressed, the US experienced a notable uptick in castor oil prices, driven by increased downstream purchases from end-users adapting to evolving market dynamics. Initially, positive market trading activity for castor oil was observed due to adequate supply levels. There was a gradual rise in regional inquiries, prompting merchants to increase their stock levels and issue higher quotations in producing nations. Challenges such as the continued concerns over decreasing inventories and delayed shipments due to recent Red Sea disputes posed threats to economic growth, creating a supply-demand imbalance scenario across the region.
Moreover, in March, the market showed resilience as freight charges eased significantly, leading to a noteworthy resumption of trade activities and shipments, thereby improving commodity availability for downstream suppliers. However, with a continuous uptick in the demand side, the stocks among suppliers remained low thereby affecting the overall supply-demand outlook. Nevertheless, suppliers adjusted their pricing strategies to capitalize on increasing demand from end-user sectors, particularly oleochemicals, and food, with positive trends in market transactions. In summary, the first quarter witnessed an optimistic trajectory for castor oil prices, reflecting an imbalance between supply and demand.
Asia Pacific:
Across the APAC region, castor oil prices followed a mixed trajectory throughout the first quarter of 2024. In India, the market began on a bearish note, continuing this trend until the middle of the quarter, with March rebounding considerably. Until February, castor oil prices continued to drop due to an abundance of stocks in key markets like Rajasthan and Gujarat, alongside lower demand during the ongoing harvesting season that starts in December each year. This surplus in supply was a key factor driving the price decrease. Additionally, the unexpected passing of a prominent figure in the castor oil industry affected market sentiment, leading to short-term trading adjustments that could have influenced the prices. February also witnessed a decrease in castor oil exports, causing export market prices to decline notably as major importing countries like China closed markets ahead of the Lunar New Year. This resulted in reduced demand and slower trading activity within the region. However, towards the end of the quarter, the market started to recover, with regional traders focusing on selling off their inventories at higher prices. Increased demand for castor oil in various sectors like biodiesel, soaps, cosmetics, and lubricants further supported this. Additionally, the arrival of large quantities of harvested seeds increased the need for extra storage facilities, potentially raising storage costs for processors and traders, and indirectly affecting the final product price. Similar market trends were observed in importing nations such as South Korea and China, where market fluctuations were influenced by regional inquiries and trader activity. Considering the export market from China, market activity remained affected until February due to the Lunar New Year holidays, which significantly affected goods availability across various regions. However, in March, market activities resumed as the Lunar New Year holidays concluded, signaling the initiation of production processes and the introduction of fresh inventories into the regional market. Domestic demand emerged as a pivotal factor propelling the surge in prices, prompting international off-takes to rise in response to the market reopening and the opportunity to secure bulk inventories. This upward momentum maintained pressure on exporting prices of castor oil for several importing regions, including Pakistan, Vietnam, and Thailand, all heavily reliant on China as a primary source of castor oil imports. Overall, castor oil within the APAC region ended the first quarter of 2024 showcasing an optimistic trajectory with a balanced supply-demand outlook.
Europe:
In the European market, particularly in the Netherlands, Castor Oil pricing displayed a nuanced pattern influenced by several factors. Although there was an overall upward trend, the market began with a bearish tone in January 2024. This downturn was attributed to subdued downstream purchasing and the onset of the harvesting season in major exporting nations, which was expected to flood the market with an excess supply of castor seeds, potentially lowering Castor Oil prices. The ongoing Red Sea dispute further complicated matters, creating geopolitical tensions that disrupted international trade and led to reluctance among merchants to place new orders. However, as February 2024 began, there was a modest rebound in Castor Oil demand, particularly from end-user sectors like pharmaceuticals, cosmetics, and food industries, which improved pricing. Exchange rate fluctuations added another layer of complexity to the pricing dynamics of imported vegetable oils, including Castor Oil. Challenges in global supply chains, such as container shortages and port congestion, along with geopolitical tensions related to the Red Sea dispute, continued to keep freight costs high, impacting overall importing costs for the Netherlands. This trend persisted until the final weeks of March 2024, with a continuous rise in downstream purchasing activity from sectors like personal care and pharmaceuticals. A decrease in freight charges thereby provided some resiliency among the market participants with respect to procurements of newer quotations of castor oil. The currency depreciation, particularly the devaluation of the euro against the US dollar, prompted merchants to focus on selling goods at higher prices to make up for their previous losses, thereby leading to an overall price increase in the market.
For the Quarter Ending December 2023
North America:
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 latest price for Refined Castor Oil (FSG Grade) the quarter ending December 2023 in the USA was recorded at 1690/MT..
Asia Pacific:
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.
Europe:
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
North America
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.
Asia Pacific
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.
Europe
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.
