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Check out the latest news from P&G Chemicals including industry trends and updates

Oleo Reporter

Check out the latest chemical and oleochemical news from P&G Chemicals including industry trends and updates across Asia, North America, Europe and more.

Oleo Reporter - Oleochemical Industry News | P&G Chemicals

As demand for bio-based chemicals has surged, the global oleochemicals industry’s focus on sustainability has intensified, too. With natural fats and oils – resources in limited supply – fueling [oleochemical](/products-and-applications) production, the importance of sustainable sourcing cannot be understated. But beyond corporate mission statements and compliance requirements, many of us in the industry care deeply, on a personal level, about responsible sourcing to help ensure the long-term well-being of people and the communities in which we operate. In Johor State, Malaysia, the P&G Center for Sustainable Small-Owners (CSS), a partnership with Asia School of Business, is garnering acclaim for its approach to facilitating more sustainable sourcing of palm oil while enhancing farmers’ livelihoods. 

With P&G’s continued support, the CSS has been an advocate for a sustainability standard that allows independent small farmers to participate in a stepwise approach to certification. The farmers receive interim rewards that help keep them engaged throughout their two- to three-year journey to full certification by the Roundtable for Sustainable Palm Oil (RSPO). RSPO approved this latest standard in November 2019. 

In August 2021, the CSS-created independent smallholder association, PERTANIAGA, became the first independent smallholder group to achieve the RSPO Independent Smallholder Standard (RISS), with 107 farmers owning 130 farms. The CSS now has 306 RISS-certified farmers with 370 farms and aims to have 640 farmers RISS-certified in the near future. The first group of certified farmers received 100% of the RSPO premiums sold as RSPO Independent Smallholder Certificates to P&G. 

Through this P&G smallholder education and training initiative, the CSS has demonstrated that there is a business case for fostering sustainability while sourcing responsibly. Furthermore, the CSS has captured significant industry attention for its groundbreaking sustainability program. 

In a recent competition among 100 shortlisted posters from 13 countries, all vying for recognition at the International Oil Palm Conference, the CSS team won first place for its entry depicting the certification journey of the smallholders served by the center. The field of contenders, judged by the Indonesian Oil Palm Research Institute (IOPRI), was quite strong, with entries from several other prestigious institutions, such as Wageningen University (WU) from the Netherlands and the University of Nebraska-Lincoln (UNL) from the United States – both leaders in agricultural research. 

P&G will continue to invest in our acclaimed approach to smallholder education and professional development through the CSS, and in other key partnership initiatives. Our [sustainability](/sustainability) initiatives are integral components of our commitment to continue being a Force for Good.

P&G’s Center for Sustainable Small-Owners (CSS), a partnership with Asia School of Business, has garnered acclaim for its approach to facilitating more sustainable sourcing of palm oil.

Sustainability Update

What a difference time can make! Compared to the historic volatility in the global glycerin market in 2022, we saw a relatively steady market through the first half of 2023. Let’s consider what has happened and current trends. 

Last year was truly a tale of two halves. The market grew increasingly constrained amid strong global demand, soft generation of crude glycerin from the biodiesel industry and congested global supply chains. Supply assurance and reliability became even more vital to glycerin customers everywhere as the global market experienced significant supply constraints. 

Overall, demand softened across the second half of 2022 while supply recovered because of biodiesel production rebounding and supply chains easing. Thus, as 2023 began, glycerin inventories were high throughout supply chains, further weakening demand. 

Demand appeared to improve in the first quarter of this year. Pharmaceutical applications for glycerin continue to garner strong demand, while use in food and personal care appears balanced, and industrial applications have been slow to recover. We continue to keep eyes on China’s recovery, with recent reports indicating some uptake in demand overall, despite continued sluggishness in glycerin requirements for epichlorohydrin (ECH). We remain cautious regarding the progress of the market in China. 

The supply of refined glycerin appears healthy but currently balanced. In the U.S., specifically, biodiesel production has been challenged by the continued growth of renewable diesel. The U.S. Environmental Protection Agency (EPA) recently finalized its biomass-based diesel blending mandates for 2023-2025, and the mandates were below what some had expected. 

In Southeast Asia, the glycerin market is preparing for an El Niño weather pattern that climatologists (with The National Oceanic and Atmospheric Administration in the U.S.) have predicted has a greater than 90% likelihood of continuing through fall. El Niños have historically hindered palm oil production in Southeast Asia, impacting the region’s biodiesel and oleochemical production. 

Without question, the oleochemicals industry has faced significant challenges from the highly volatile and demanding market cycles over recent years. 

Despite pessimistic outlooks for economies across the globe, we’ve seen strong, steadily growing demand across our glycerin business this year. As with any market, the future trajectory of the international glycerin trade remains unconfirmed, but we remain focused on maintaining the supply assurance, quality and service that our customers have come to expect.

Despite pessimistic outlooks for economies across the globe, P&G Chemicals has seen strong and consistently growing demand across our glycerin business this year.

Global Glycerin Market Update

Despite positive signs in recent months, 2023 doesn’t seem to be shaping up as a banner year for tropical oil production. Seasonally stronger production of palm oil and palm kernel oil (PKO) may help inventories grow during the second half of the year. However, even with relatively weak demand, lower than expected production could result in global supplies of palm oil and PKO ending the year approximately flat compared with 2022. 

A similar story seems to be unfolding for coconut oil (CNO), as 2023 production is disappointing growers after strong results from January-March. Softness in demand for oleochemicals continues to be notable for lauric oils, in particular. Stocks of PKO are large enough to potentially keep its price relatively close to that of palm oil, while CNO’s price has moved higher and reached a point of demand elasticity, shifting some users of oleochemicals to PKO. CNO may remain at a premium to PKO throughout 2023. 

Palm oil’s price has had strong support due to reduced U.S. soybean production expectations, Black Sea oilseed supply concerns, and acknowledgement that the aging tree profile is impacting palm oil production in spite of very beneficial rainfall volume in 2022 and early 2023. An El Niño weather anomaly in 2023 seems most likely to be mild to moderate in nature, and that is notable because El Niños typically cause rainfall shortages in Southeast Asia and North America. Tropical oil production is impacted by rainfall amounts 9-12 months later. 

In mid-2023, prices for rapeseed and soybean oil were very competitive with palm oil, but palm oil’s price stands to reflect regained demand during the second half of the year. Tropical oil prices will be influenced by North American and European oilseed harvest results in October 2023. 

With the market dynamics ever evolving, P&G Chemicals continues to monitor supply and demand. Since 1837, we’ve taken a comprehensive approach, focusing on our chemicals expertise to innovate and adapt to meet the changing needs of the industry and our customers. 

We will continue to do that. Our core commitment remains delivering high-quality [oleochemical products](https://www.pgchemicals.com/products-and-applications) and creating value for our clients and suppliers in more than 70 countries.

Even with relatively weak demand, lower than expected production could result in global supplies of palm oil and PKO ending the year approximately flat compared with 2022.

Oil News

While inflation in the Eurozone may have decreased during the past month (to an estimated 4.3%, according to Eurostat), July/August/September chemical trades were slower than typical during the summer period in Europe. 

Except for some spot fatty alcohol requests across September, the overall demand for agrochemicals, lubricants and antioxidants remains muted as industries are slowly recovering from the challenging economic environment in Europe. 

However, to serve evolving customer needs, P&G Chemicals has recently made a new stearyl alcohol grade available with higher C18 alcohol purity, at 99%. This product is also available as RSPO Mass Balance. Samples are available if you are interested in evaluating this, or many of our other [oleochemical offerings](https://www.pgchemicals.com/products-and-applications). 

Looking more broadly at the European oleochemicals market, our industry faces potential headwinds and tailwinds that could impact supply/demand balances over the next months. These variables include the possible impact of El Niño on already volatile lauric oils markets, ongoing developments in the EU geopolitical environment, potential effects of higher winter energy prices on production costs, and whether we will see a change in exports from Asia. 

Nonetheless, as the world focuses more on sustainability, the European oleochemicals market will continue to evolve and potentially serve a pivotal role in shaping the future of various industries across the continent, driven by both customer needs and regulatory changes. 

Meanwhile, we know that you, our customers and suppliers, strive to stay abreast of related business opportunities. We were pleased to have met many of you and discussed some of the possibilities at the recent European Petrochemical Association (EPCA) 57th Annual Meeting in Vienna. Feel free to reach out to us anytime for additional information.

Inflation in the Eurozone may have decreased over the past month but chemical trades in July-September were slower than typical for the summer in Europe.

European Market Update

Earlier this year, I returned to Singapore after spending a couple of years in the United States managing P&G Chemicals’ glycerin portfolio. I was excited to dive into the hustle and bustle of the dynamic Asia marketplace, chart the path forward for P&G Chemicals’ Asia sales team and of course, see my family and friends again. It’s been quite the roller coaster ride, to say the least! 

We remain cautiously optimistic. The oleochemicals business is a cyclical one. High prices make low prices, and low prices make high prices. The outlook for Asia is uncertain – recessions, currency devaluations, inflation, export downturns, emerging new regulations – and the list goes on. However, following a challenging first half of 2023, we are seeing requests for unforecast customer demand. Has inventory destocking across the supply chain run its course? 

We see some bright spots in several market segments and regions with demand starting to pick up, and recent spot demand linked to both tightening of supply and excess inventories approaching depletion after months of destocking. Amid these developments in the continually evolving Asia marketplace, I often must pause and remind myself that change is the only constant. In an unpredictable market, we can choose to make a difference by focusing on things that are within our sphere of influence. 

What can P&G Chemicals, as sellers of oleochemicals, influence? I’ve distilled it into three key areas: 

<ol class="-ml-30"><li style="padding-left: 45px;"> 1. Exceptional Customer Experiences. Buyers buy from people they can rely on and trust. In today’s increasingly digital world, where business transactions often take place online, the value of face-to-face interactions to build partnerships and find solutions remains paramount in B2B relationships. Nowhere is this more evident than in the dynamic and diverse markets of Asia. 
While having tools to connect virtually is important, they will never replace the magic of face-to-face interactions. As technology continues to advance, it is crucial to strike a balance between on-demand digital interactions and the invaluable benefits that come from meaningful, in-person connections that demonstrate commitment and foster trust. 
Engaging in industry conferences and trade shows allows sellers to expand their networks, gain visibility and tap into valuable resources and information. Plus, we love meeting new people! Find out <a href="/find-and-contact-us" style="
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">here</a> which trade shows and events we attend around the world. </li>
<li style="padding-left: 45px;">2.Consistency and Reliability. We strive to provide high-quality <a href="/products-and-applications" style="
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">oleochemical products</a> from world-class plants with strong cross-functional technical and supply chain support. Honoring our agreements is important to us because it builds trust and delivers on our reliability promise. Customers appreciate consistent product quality, reliable service and adherence to commitments. We aim to understand their needs and provide win-win solutions. 
For all of us at P&G Chemicals, customer satisfaction is important. We have launched our annual Global Customer Survey and hope to get feedback from you, our valued customers, on how we can continue to better serve your needs. </li>
<li style="padding-left: 45px;">3.Competitive Value. We focus on bringing value to our customers and their stakeholders. P&G Chemicals continues to invest in our plants to improve our high-purity oleochemical products and maintain best-in-class quality systems. 
Our glycerin refinery in Kuantan, Malaysia, has consistently been rated AA for the BRCGS Global Food Safety Standard. P&G Chemicals has a strong regulatory team that ensures our products have the right certifications. We pride ourselves on staying ahead of market trends and being on top of regulatory changes so that customers can use our materials with peace of mind, freeing up their time to focus on building their businesses. 
With sustainability at the top of everyone’s mind, P&G Chemicals is committed to ensuring that our products are fully compliant. Keep an eye on our LinkedIn page and our website to learn more about our <a href="/oleochemicals-products/sustainably-sourced-palm-oil-products" style="
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">palm sustainability program</a>. Reach out to us through your account representative or <a href="https://www.tfaforms.com/4679413" target="_blank" style="
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 color: #003DA5;
 font-weight: bold;
">here</a> for more details on how we can help you navigate and meet your sustainability needs. </li></ol> 

There is a lot that sellers of oleochemicals cannot control. That includes the weather, oil prices and when the global economy will rebound. But there is a lot we can control. P&G Chemicals will continue to invest in customer relationships and strive to provide win-win solutions and the best-in-class service that our customers have come to expect.

P&G Chemicals will continue to invest in customer relationships and strive to provide win-win solutions and the best-in-class service that our clients  have come to expect.

Asia Market Update

As I reflect on my 40-year journey with Procter & Gamble, I can’t help but marvel at the enduring legacy of this company, our industry and the P&G Chemicals business. Since our inception in the mid-1800s, P&G has been at the forefront of the oleochemicals industry, constantly evolving and adapting to the changing times. In a world of perpetual change and challenges, I am proud to be a part of an organization that continues to thrive, innovate and support our global customers. Going forward, how will we ensure that P&G Chemicals continues to be well positioned to support our external business partners in their journeys? 

## __Expertise in Oleochemicals :__ 
With over a century and a half of experience as a producer and user of oleochemicals and their derivatives, P&G Chemicals has a unique position in this industry. We have honed our knowledge and talent to create high-quality [oleochemical solutions](/products-and-applications ) that meet the diverse needs of our customers. Our legacy has been built via collaborations with many amazing business partners. We could not be where we are today without the expertise of these great companies and their people. 

## __Delivering on Commitments :__
One of the hallmarks of P&G Chemicals is our steadfast dedication to delivering on our commitments. We honor our agreements and understand that our customers depend on us for consistency and reliability. This trust has been built over decades of partnership, and we take it seriously. Even in the face of global challenges, we remain committed to upholding the high standards that define us. 

## __Multifunctional Support :__ 
Today’s challenges require multifaceted approaches, and P&G Chemicals is well prepared to provide them. We offer more than just products; we offer comprehensive support to help our customers tackle the complex issues they face. Whether it’s finding sustainable alternatives, optimizing supply chains or addressing regulatory concerns, we stand by our customers every step of the way. 

In conclusion, as I look back on my four decades with P&G and forward to the future, I am filled with pride and optimism. The global oleochemicals market will face challenges, but with P&G Chemicals as your partner, you have a trusted ally with [a rich history, a commitment to excellence and a vision for a sustainable tomorrow.](/our-history) 

Thank you to those who have been a part of my incredible journey. The adventure continues!

The global oleochemicals market will face challenges, but with P&G Chemicals as your partner, you have a trusted ally with a rich history, a commitment to excellence and a vision for a sustainable tomorrow.

Executive Perspective

This certainly looks to be a dynamic year for the oleochemicals industry! Demand across the sector saw weakness during most of 2023 due to overall economic uncertainty and inventory overhang throughout supply chains – but demand has returned in early 2024, as it did near year-end 2023. Has the industry successfully worked its way through the inventory glut, or are customers preparing for the uncertainties that lie ahead this year? 

The coming months seem poised to be VUCA (volatile, uncertain, complex and ambiguous). The escalating volatility in the Red Sea is a paramount concern. The activity there, coupled with ongoing shipping slowdowns in the Panama Canal, has led to increased logistics costs and substantial disruptions in trade flows and reliability across numerous industries. 

The situation in the Red Sea, characterized by missile and drone attacks from various factions, has prompted major shipping lines to avoid the Suez route, opting instead for the longer Cape of Good Hope route. Carriers are implementing significant surcharges to account for the additional time, fuel and insurance needed. 

Also, although the drought that began last year in Panama improved this January, a return to normal shipping volume in the Panama Canal may take up to a year. P&G Chemicals will continue to work closely with our contracted customers to protect our agreements by building resiliency in our supply chains and agility via our regional manufacturing locations. 

The outlook for feedstocks remains an area of uncertainty. Our industry is in the seasonally low production period for palm (January through March), a time in which stocks could be depleted. Palm production for 2024 is expected to be lower than in 2023 due to the potential impacts of El Nino, aging tree profiles and a decrease in fertilizer use. However, we’ve seen positive indicators for other vegetable oil complexes, such as soy and rapeseed, which could help balance out potential price spikes in palm oil. 

While production of traditional biodiesel remains strong in Southeast Asia, production of renewable diesel in North America has grown disproportionately. With this growth, we’ve seen elevated risk to traditional biodiesel production and therefore, North American crude glycerine. As the petroleum industry continues securing its supplies of renewable feedstocks for 2024, the role that traditional biodiesel will serve in the industry is uncertain. 

However, when we consider the potential demand for oleochemical products through a “big picture” lens on America’s economy, we see reason for cautious optimism. As the U.S. Department of the Treasury explained in a recent [update](https://home.treasury.gov/news/featured-stories/the-us-economy-in-global-context), “The U.S. economy in 2023 outperformed expectations along three key dimensions: growing economic output, labor market resilience, and slowing inflation.” Furthermore, according to the update, “U.S. real GDP…is now 6.1 percent higher than in Q4 2019.” 

Additionally, as the Bureau of Labor Statistics [shared](https://www.bls.gov/news.release/pdf/empsit.pdf) on Feb. 2, 2024, the seasonally adjusted unemployment rate for January 2024 was 3.7 percent. The U.S. unemployment rate has been consistently below 4 percent since January 2022, recovering well after its COVID shock. 

As we look ahead to the rest of 2024, we will be closely watching how the U.S. presidential election, evolving interest rates and the potential impacts of geopolitical tensions affect the economy. Whatever the scenario may be, it’s heartening to know that, backed by oleochemical expertise honed over more than 180 years, P&G Chemicals will continue its strong focus on adapting to customer needs by staying ahead of industry trends and investing in reliable products and supply chains. Throughout uncertainty, P&G Chemicals offers our customers the benefits of domestic supply from our production locations across the globe. 

And I know firsthand the dedication of our people, as I’ve recently rejoined P&G Chemicals North America after a global tour through our P&G Chemicals Europe and P&G Consumer Products businesses – and just returned from a visit to our Sacramento plant, which celebrated its 70th anniversary last August. It was inspiring to get to better know the people and processes committed to delivering high-quality [oleochemical products](https://www.pgchemicals.com/products-and-applications) to our customers. I am excited to be back with the P&G Chemicals team during this dynamic time and look forward to (re)connecting with you soon.

Whatever the scenario may be, it’s heartening to know that with more than 180 years of oleochemical expertise, P&G Chemicals will continue its strong focus on adapting to customer needs.

North American Market Update

At the March 2024 POC (Palm Outlook Conference) in Kuala Lumpur, Malaysia, industry experts shared compelling presentations about the supply and demand dynamics of the tropical oils industry. I had the pleasure of traveling to the Philippines for a few days prior to the event – and the experience and knowledge gained while meeting with several coconut smallholder farmers was beyond compare. I thank them all for their unwavering dedication to this important industry that we rely upon to develop the essential products our consumers depend on. 

Post conference, we have seen a continuance of the slowdown in palm oil (PO) production that began after a seasonal peak between October and December 2023. This slowdown is expected to last through June 2024. Palm yields are being affected by inadequate replanting and aging oil palm trees; about one third are more than 25 years old. Lower production and decreased inventory have led to recent palm price increases. 

On the contrary, soybean oil is anticipated to reach record production in South America, possibly capping palm oil price increases. Higher North American biofuel production is expected to start now (this spring) and drive higher demand for used cooking oil (UCO), tallow and soft oils (soy, canola) – a scenario that has the potential to support price increases of various feedstocks, including palm oil. 

Palm kernel oil (PKO) is linked to palm oil production as approximately 10% of PKO is contained in the palm fruit (although palm kernels can be stored longer and processed later). If the decline in palm oil production continues, PKO stocks will likely continue decreasing through mid-2024. PKO’s price has recently increased, reaching near parity with that of coconut oil (CNO). 

Domestic demand in the Philippines for CNO is expected to increase by approximately 70 kilotons per year starting in July 2024 and driven by an increase in the local biodiesel mandate from 2% to 3%. On the positive front for supply, coconut trees previously damaged by typhoons in some regions of the Philippines are recovering and bearing new fruit that should be harvested in the coming months. Also, there is now general consensus that the El Niño effect is moderate in most tropical oil producing regions with no significant production loss expected at this point from this weather phenomenon. 

Lastly, the European Union Deforestation-free Regulation (EUDR) requires that certain forest commodity materials are deforestation free, legally produced and accompanied by a due diligence statement. The EUDR was widely discussed during the 2024 POC, as work is underway toward the goal of ensuring that the relevant portion of palm and its derivatives meet EUDR requirements by the end of this calendar year. 

Our P&G Chemicals team will continue to monitor the potential impact of EUDR on the global supply of oils. We will work with our customers and suppliers to comply with this new regulation.

On the heels of a key tropical and lauric oils sector conference, gain fresh perspectives on the palm oil, palm kernel oil, soybean oil and coconut oil markets.