Uncertainty Remains in European Oleochemicals Market
By: Levent Tanriverdi, Europe Sales Director
Although improved supply chains have made global trading for oleochemicals easier, many European markets for natural fatty alcohols, fatty acids and methyl esters are still suffering from significant volatility. The question many people are asking is, “What is your outlook for the second half of this calendar year?”
To recap recent history, demand in the European oleochemicals market rose significantly throughout 2022, saw a downturn by the end of year and had a better-than-expected February-March 2023. Many experts who have been in the industry a long time will tell you that they have seen this type of scenario play out many times but have never seen it play out so quickly.
During recent oleochemicals trade events in Europe, our P&G Chemicals team met with many customers who were asking for our outlook on the third quarter of 2023 and sharing their perspectives on their businesses. Our takeaway is that there is not yet a clear conclusion, but most people we talked to expect the second half of the year to be better than the first half.
Certainly, the picture will vary by material, by application and by industry; however, in general, the following factors continue to have an impact on the overall supply and demand situation:
- Macro picture: inflation reducing consumer buying power, high energy costs increasing manufacturing costs
- Recession outlook: economic uncertainty affecting manufacturer investments and consumer spending
- China’s restart of production: outputs not yet at pre-Covid levels, but production reportedly about to restart at full scale
- The European Union’s anti-dumping duties on Indonesian produced fatty acids: following its implementation, we are seeing some movements on international trade flows and recalibration of the European industry.
At P&G Chemicals, we are optimistic that the second half of the year will be better in terms of stability and predictability. As usual, we will provide the maximum possible flexibility and support to our customers as we all go through this period.