We experienced a further oleochemical demand increase this quarter as the recovery across applications continued following last quarter’s momentum. Cleaning, personal care, medium chain triglycerides (MCT) and agrochemicals continue to lead the path, while other applications follow with the continued mixed signals from the automotive industry. While the industry is growing compared to 2020, it has not yet reached pre COVID-19 levels. The demand for RSPO Mass Balance product also continues to rise and now expands beyond the traditional fast moving consumer goods applications. While we can certainly be pleased with the positive business momentum, the question that kept buyers and sellers sleepless through this quarter was: How do we meet that demand?
Indeed, what some thought would be a temporary constraint on international logistics, did not only persist through the whole quarter, but expanded beyond Asia to Europe lanes and is now also affecting trade between Americas and Europe. Even within Europe, the trade between the European Union and the United Kingdom continues to pose significant post-Brexit challenges with delays and logistic capacity constraints. As a result, buyers are relying increasingly on European oleochemical producers to get material on time at their production sites. With lauric oils remaining far above their ten-year average pricing and limited availability of RSPO PKO and constraints on some pure cuts such as cetyl alcohol and capric acid, there continues to be bullish pressure on the European oleochemical market.
Even in this difficult context, we remain committed to serving our long-term customers and to honor any agreement we enter into. Please contact your Account Executive to review your needs for the upcoming quarter and ensure that they are secured.