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Supporting Customer Needs in Asia’s Volatile Oleochemicals Market

May, 2022

By: Azean Mohammad, Eurasia Sales Category Director

The first months of this year have proven challenging. We entered 2022 with continuous pressure on global and regional logistics, amplified by December’s heavy rainfalls and flooding in Malaysia. These adverse weather conditions in the low seasonal production period mean that lauric oils and other oleochemicals face supply-demand challenges. We are monitoring closely the Indonesian government’s efforts to manage local palm oil prices within their country. Our efforts remain focused on minimizing the impact to our customers of these market realities.

Despite the challenging environment, our Malaysian operations team seamlessly tackled freight and port operations—without compromising the safety of our employees. Our team focused on supply assurance, relentlessly following through on shipments and on our contractual commitments to our customers.

The journey to a “new normal” is ongoing as Asian governments continue to pivot amid waves of the Omicron variant. This is significantly different than operations in 2021, as COVID-19 is now being treated more as endemic, allowing each country to set its own processes, helping the Asian economy recover from losses. The notable exception is China, where the zero COVID policy and the resulting lockdown of Shanghai create an additional challenge on port operations and economic activities. Here again, P&G Chemicals has been agile and modified its supply chains toward different ports to continue meeting our customers’ needs.

On labor, recent news that 32,000 foreign workers will arrive in Malaysia soon (delayed from February) would be a much welcome relief, though sentiments are still cautiously optimistic. The news surrounding Indonesia DMO (domestic market obligation) and subsequently palm export ban (now lifted) and the global commodities inflation have brought additional dimensions to the already volatile market dynamics. Both demand and industrial plant/factory output have been tapered off due to Lunar New Year and the Beijing Winter Olympics in February, and Shanghai lockdown of March-April. We have seen demand return, though likely varied across products, and will continue serving our Asian customers’ demand in priority before offering potential excess products to Europe and USA who are in strong need for additional support.

Along with the safety of our employees, supply chain resilience remains a priority. P&G Chemicals will continue to do our best to provide our customers with reliable, quality products. We are proud of the work we have completed in the Asia region for more than 27 years, contributing to our global legacy of 180 years of service. As always, we are committed to supporting our customers’ needs in this very volatile marketplace.