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Asia Oleochemicals Market Update

October, 2021

By: Osamu Kawakami, Asia Sales Director

P&G Chemicals operations in Malaysia have been impacted by COVID-19 related restrictions. We have dealt with multiple lockdowns and movement control orders since the onset of the pandemic. More recently, nationwide restrictions imposed across various manufacturing sectors resulted in plants having to operate at limited capacities and led to a slowdown of the end-to-end supply chain. While the pandemic has posed significant challenges for supply chains across the region, the P&G Chemicals operations team in Malaysia has been working closely with our supply partners to tackle challenges in production, ocean freight, and packaging. We remain focused on supply assurance and shipping all our contractual commitments to our customers across the region.

We anticipate that several other factors will impact the Asia oleochemical market going forward. The national push from China in reducing carbon emissions will have a direct impact in the China oleochemical supply and demand dynamics. China is facing a power shortage due to extreme weather, a surge in demand for Chinese exports, and a national push to reduce carbon emissions. Government mandates have forced factories to shut down or run at limited capacities, which impacts the overall oleochemical supplies in the market. India seems to be heading toward similar energy availability concerns for other reasons, such as a limited ability to import coal. Additionally, limited vessel space, logistical issues and soaring freight rates are expected to continue to plague the market.

Supply and demand reconciliation in the region across products such as heavy cut alcohols, heavy cut esters and glycerin are expected for the near term. The commodity of lauric oil is expected to be volatile in view of the ongoing challenges in the region.

Despite facing these difficulties, our long-term values of producing quality products safely, meeting supply commitment, and creating long term joint value with our customers will remain unchanged. We will continue to do our best to provide our customers with reliable, quality products as we have done in the Asia region for more than 27 years and globally for over 180 years.