Here’s What’s Driving Oleochemicals Market Flux in Asia & Beyond

Author note:
I am pleased to have recently stepped into my new role as Categories Director for our P&G Chemicals business in Eurasia. With 15 years of experience in purchasing, managing multiple spend categories such as chemicals, services and contract manufacturing, I am delighted to leverage my expertise and to collaborate with our talented team to help meet the needs of our customers, implement impactful strategies and drive innovation across the region.

In Asia, where I am based, and globally, the oleochemicals industry is navigating a landscape characterized by complex market dynamics, supply challenges and new regulatory developments. However, P&G Chemicals remains dedicated to being a dependable partner to our customers in these uncertain times.

Regarding feedstock, oil prices have surged during the past few months and continue to rally as we approach the end of peak production season for palm. In both Malaysia and Indonesia, the boost in production from peak season was disappointing vs. previous years to dry weather and aging trees.

Additionally, coconut production has faced declines, first from El Niño-induced drought and now from heavy monsoon rains, both of which can hinder coconut growth. Despite lower-than-expected production levels, demand remains strong, driven by competition among the oleochemicals, energy and food sectors.

Notably, oleochemical demand is robust, with some companies building inventory in anticipation of the EU Deforestation Regulation (EUDR). Recent news regarding a potential timing delay in EUDR implementation has added a new element of volatility into the short-term oil market outlook.

On the logistics front, the ongoing situation affecting transport in the Red Sea continues to cause significant delays for vessels returning to Asia, resulting in increased port congestion. As a result, many ships are still opting to divert via the Cape of Good Hope, a move that is driving up freight rates. We are also seeing trade imbalances due to a decrease in container availability, as many containers leave Asia without return cargo. Concurrently, spikes in demand are prompting some buyers to engage in forward buying to navigate these challenges.

In the face of ongoing market fluctuations, P&G Chemicals remains steadfast in our commitment to core values: delivering high-quality oleochemical products safely, fulfilling our supply commitments and fostering long-term value for our customers. With nearly 30 years of experience in Asia and more than 180 years globally, we have consistently achieved excellence — and we will continue to do so.

As we navigate the challenges together, P&G is poised to support our partners in thriving within the evolving market landscape. Your trust is our most valued asset, and we are dedicated to being your reliable partner at every step of the journey.