Asia Oleochemicals Market Update January, 2021

As the COVID-19 lockdowns are easing across the region and government policies and economic stimulus implemented, we are seeing a pick-up in Asia’s economic activities. But, the measures in place to reduce contagion and potential second and third waves of COVID-19 infections will likely depress recovery to levels below those before the pandemic. In general, countries are reorienting their growth strategies towards growing domestic demand and away from reliance on exports.

Oleochemical demand from household, industrial and institutional cleaning categories has stabilized after peaking during the pandemic panic. Buyers are cautiously optimistic, and are adopting a regular but smaller parcel inventory replenishment strategy to minimize risk. Plant maintenance and downtime across several producers has created a short-term imbalance between supply and demand, which is expected to ease towards the second half of 2020. Moving forward, the rising lauric oil prices may hold sway over the economics of oleochemical production, even as demands recovers slowly.