Managing Uncertainty in the Oleochemical Market

Author Note: With nearly three decades at P&G, I've navigated various roles across regions and functions. Four years ago, I became the Global P&G Chemicals Finance leader, and last year, expanded my role to include Global Market Strategy & Planning. I'm thrilled to leverage my expertise with a talented team to meet customer needs in an increasingly volatile environment.

Over the past years, the pace of change has drastically increased in the global oleochemicals market. Highs have gotten higher, investments have become more uncertain, and regulatory & trade policy changes have occurred more frequently.

Regarding feedstock, tropical lauric oil (CNO/PKO) prices remain high. Since the start of 2024, we have seen price increases. A continued shortage of coconut oil (CNO), driven largely by low production and biodiesel mandates in the Philippines, has helped fuel record prices. This shortage, due in part to weather, aging trees and lack of replanting, is not expected to ease until the second half of 2025. Palm kernel oil (PKO) pricing remains relatively high as stocks remain low, while production is slowly picking up as we enter peak production season.

Oleochemical prices have shown upward movement, with mid-cut alcohols currently above their 5-year average. Light-cut fatty acids, particularly C8, have reached levels not seen since early 2022. Other categories, such as broad-cut and light-cut fatty acids, are also above their historical averages, while heavy-cut alcohols show similar strength. Overall, the market dynamics remain influenced by various factors, including feedstock costs and macroeconomic conditions.

Regulatory changes and evolving trade dynamics are expected to continue driving further volatility. Countries are trying to form new trade alliances that could affect trade flows, including those of the oleochemical industry. Also, regulatory changes such as the EU Deforestation Regulation (EUDR) remain uncertain in timing and execution, infusing additional complexity into an already volatile market. EUDR’s postponed to an expected enforcement date of January 2026 has provided companies with additional time to ensure compliance. Our organization, P&G Chemicals, has been preparing for this regulation and remains committed to being 100% ready for its implementation.

Relationships matter, especially in uncertain times. As trade flows change, supply availability could be at risk. Strong business partnerships that allow transparent and constant communication are critical. While prices in a commodity-driven market will be supply-demand determined, the understanding of the end-to-end supply chain, including the application of oleochemicals, is important. At P&G Chemicals, we listen and seek to understand our customers’ needs, both short-term and long-term. Our customers’ success and the value we bring to these customers drive our success.

Proactive risk management is vital. P&G Chemicals has provided value in the oleochemical industry for over 160 years. Our scale and unwavering commitment to oleochemical production and our customers remains unchanged, no matter where markets go. Due to our vertical integration into the fast-moving consumer goods industry, P&G Chemicals can provide a steady supply of a wide portfolio of high-quality oleochemical products around the globe. Our technical expertise and sales team engagement can provide supply chain solutions that meet diverse customer needs. Our unique supply chain often brings advantages with regards to supply assurance (for example, given our domestic production facilities in the U.S., Europe and Asia). The shorter supply chain can allow faster reaction in times of change.

Environmental compliance and ability to partner with customers on current and future needs is also crucial. As many of our business partners have committed to environmental goals such as carbon reduction targets, P&G Chemicals is committed to providing value-added resources like externally certified product carbon footprint (PCF) data for our oleochemical portfolio, to help our customers meet their decarbonization targets. These PCFs, which can be available with our products starting in July, adhere to internationally recognized standards and P&G’s strict certification requirements.

Having long weathered market volatility, challenges of feedstock availability and prices, shifts in trade patterns and resulting supply and demand dynamics, as well as evolving regulatory and trade policy changes, P&G Chemicals is dedicated to supporting our customers and acting as a catalyst for sustainable business growth. We aim to lead positive change and continue providing high-quality oleochemical products, ensuring local availability and delivering on time.

Our portfolio of fatty alcohols, fatty acids, methyl esters and glycerin is created from responsibly sourced natural feedstocks, and we offer a choice of low carbon options to meet the diverse needs of our customers.

My colleagues and I are eager to engage with you to explore how we can help your company thrive during times of uncertainty in the oleochemical market, leveraging opportunities while managing risks effectively. Feel free to reach out!