European Market Update
By: Melanie Gallmann, Senior Global Marketing Manager
As we continue to navigate a very volatile and uncertain environment, the European market still faces constraints on supply—while simultaneously experiencing demand growth across industry sectors. As we are evaluating the situation, we identified four factors majorly influencing European Market Dynamics: demand, supply, costs, and local logistics.
1. Demand: As industries are still navigating the COVID crisis, we’re starting to see consistent growth in demand forecasts. Healthy demand continues in the Cleaning, Personal Care, MCTs and Agrochemicals market. With the locally short supply, we see buyers seeking to purchase future volumes well ahead of historic buying frequency.
2. Supply: Europe is relying on supply from both local producers and imports from Asia. With the ongoing challenges of global freight, in terms of capacity and on-time delivery, European suppliers are being solicited for more volume. Supply security and on-time delivery have become the key strategic differentiators for oleochemical users that will enable business growth and prevent production shutdowns.
3. Costs: Lauric oil prices have steadily increased over the past year, bringing PKO close to the 2011 peak - with a price over $2,000USD/MT for non-certified PKO as of current reporting. Additionally, there has been a continuous rally on RSPO MB premiums. Combined with a global energy cost surge, this will propose further challenges for both buyers and sellers, in an already constrained market.
4. Local Logistics: Transport of goods within Europe remains a challenge, due to the chronic shortage of drivers across the EU - exacerbated by an increasing demand for transport as the economy recovers.
Despite all these challenges, P&G Chemicals remains committed to supporting our customers’ needs to the best of our capabilities - with quality material, local availability, and on-time delivery.