In our September 2022 update on the North American oleochemicals market, I reflected on the roller coaster ride that was COVID, sharing the perspective of an industry professional who described a world where we went from “just in time” inventory to “just in case” inventory during the pandemic. I met earlier this year with that colleague, who added that perhaps a good description for the 2023 chapter might be “just too much” inventory.
Inventory overhang and the easing of supply chains have been the story for much of this year. In many of my recent interactions, industry players describe customers working through inventories and some uptake in order activity – a positive sign, although not at the buy it “just in case” levels we saw during the pandemic. Also, with hurricane season having begun, inventory builds have started for companies that are active in the Gulf of Mexico.
With respect to the oleochemicals market, lauric oils have experienced upward pressure over the past quarter and there are reports of Asian producers running at lower operating rates. This may impact pricing of mid-cut alcohol due to the strong correlation with oil feedstock input costs and global supply-demand dynamics.
A continued El Niño weather pattern, which historically brings drier weather to southeast Asia, remains a high probability. This could impact output of palm oil and/or palm kernel oil (PKO).
Co-product alcohols, acids, esters and glycerin are really a story of supply vs. demand. For example, overbuying of short chain acids and esters by market players has driven a correction in global market pricing. The correction has positioned short chain acids to potentially attract demand away from synthetic C9 pelargonic acid in applications whose formulas have flexibility.
The cough & cold and dry winter seasons historically drive demand for glycerin for production of cough syrups and moisturizers. The U.S. Environmental Protection Agency (EPA) recently finalized its biomass-based diesel blending mandates for 2023-2025, and with the mandates falling below what some had expected, it will be interesting to see how the glycerin market dynamics play out in 2024 and beyond. See what our P&G Chemicals team is monitoring across the glycerin marketplace.
In product news, I’m excited to share that as P&G Chemicals keeps in mind the latest market, industry and regulatory trends, we now offer glycerin and heavy cut alcohol products with registered Cosmetic Ingredient Codes from the China National Medical Products Administration (NMPA). The Cosmetics Supervision and Administration Regulation (CSAR) is the overarching legislation for cosmetic finished products sold into China, and the new regulation requires registration of the finished cosmetic products. All Raw Material (RM) information must also be submitted to enable finished cosmetic products to be sold into China.
With P&G Chemicals’ new RM codes, our customers can register their finished cosmetic and personal care products with the NMPA, avoiding time and effort that otherwise would be needed to fill out additional forms. Here are trade names and P&G Chemicals product codes that may come in handy:
- Star KPO Kosher Glycerin: 10245073
- Moon OU Kosher Glycerin USP/FCC: 10275531
- Superol KPO Kosher Glycerin USP/FCC/EP: 10247141
- Superol KPO MB Kosher Glycerin USP/FCC/EP: 10275699
- CO-1650 K BULK MB: 10275654
- CO-1650 NK MB: 10275758
- CO-1695.5 K CETYL ALCOHOL, NF: 10270348
- CO-1695.5 K NF MB: 10275721
- CO-1898 K MB STEARYL ALCOHOL, NF: 10275649
- CO-1898 K STEARYL ALCOHOL, NF: 10275436
Despite macroeconomic challenges around the world and interest rate hikes by the U.S. federal government, America’s economy remains resilient, with low unemployment and strong consumer buying power. P&G Chemicals remains positioned to provide our customers with the oleochemicals quality, supply assurance, service and expertise they have come to expect from us and our domestic production sites in Sacramento, California, and Cincinnati, Ohio.