EUROPE CHEMICAL PROFILE
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Fatty acids
Samantha Wright London
Uses
Key end markets for fatty acids are the cos-
metics and personal care industries.
Fatty acids are mainly used in the produc-
tion of soaps, detergents and surfactants
used in products such as shampoos, liquid
detergents, body lotions and toiletries.
They are also used in the manufacture and
compounding of natural and synthetic rub-
bers to improve the performance of paints,
plastics, lubricants, textiles and rubber prod-
ucts. A key end market use for this is in coat-
ings for rubber car tyres.
In food they can be used to produce mono-
glycerides to act as food emulsifiers.
Supply/demand
Fatty acids availability in Europe has been very
limited so far in 2022. Tightness has plagued
the palm-based market since 2020 amid ves-
sel delays and high freight costs from Asia.
While the delays are not as dire as they
were at the height of the pandemic, there are
still shortages in the European market.
Supply constraints have also been present
in the tallow market since 2020 and contin-
ued into 2022. These issues were originally
caused by a lack of raw tallow supply amid
low slaughter rates.
Though slaughter rates have since im-
proved, availability for the first quarter of 2022
was limited due to high demand from the bio-
diesel market for raw tallow.
Demand has been consistently healthy for
applications in the cosmetics, personal care
Europe fatty acids
€/tonne, C18, contract FD NWE
3,000
Oleic acid standard palm oleic
Stearic acid triple pressed palm stearic
Tallow distilled standard, oleic
Tallow fully hydrogenated stearic
2,500
2,000
1,500
1,000
Apr 2021 Mar 2022
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and food industries during the last six months.
Automotive demand has also been steady,
though the falling living standards due to high
inflation levels could impact this market.
Feedstock crude palm oil (CPO), palm ker-
nel oil (PKO) and palm stearin market funda-
mentals have been closely monitored by fatty
acids players so far in 2021.
Market participants were concerned about
the impact of new regulations in Indonesia an-
nounced during March, where 20% of all palm
oil production was to be sold domestically.
These restrictions were removed by the end
of March.
Prices
In the fourth quarter of 2021, prices were
steady to firm dependent on grade. Due to a
more pronounced tightness in the oleic acid
market, these prices increased for both tallow
and palm material during the fourth quarter.
While tallow and palm oleic values had
been at the same level during the third quar-
ter, tallow prices over took palm-based values
slightly during the fourth quarter.
Palm and tallow-based stearic acid prices
were steady during the fourth quarter as the
shortages of these grades did not impact
availability to the same extent as in the oleic
market.
In the first quarter, all grades jumped up
amid further tightness across the grades.
Tallow material was more expensive than
palm-derived product for both stearic and
oleic acid.
This is mainly because tallow negotiations
began later in the previous quarter, when
availability had tightened further.
In the week ending 31 March, second quar-
ter price discussions were nearing their end,
with palm-based players now looking ahead
to Q3 and Q4. Tallow-based contract discus-
sions for Q3 were yet to begin.
Upward pressure was seen for Q2 con-
tracts at a range of triple-digit increases. Palm
oleic contract prices were quoted in the high
€2,000s/tonne. Tallow oleic prices were
heard around €3,000/tonne.
Technology
Fatty acids are primarily derived from vegeta-
ble oils, in the main palm and coconut oil
Palm oil, palm kernel oil and palm stearin
A full list of plants and projects capaci-
ties, forecasts, production volumes and
operating rates are available on the
ICIS Supply and Demand database
are the raw materials used for fatty acids pro-
duction in Malaysia and Indonesia, while co-
conut oil is used in the Philippines.
Fatty acid production in Asia, particularly in
southeast Asia, accounts for around 80% of
global fatty acids production.
In Europe, fatty acids are also produced
from tallow fats.
The basic acids from this production are the
C18 stearic and oleic acids. Alternative vegeta-
ble feedstocks including rapeseed oil and olive
oil are gaining some traction in Europe amid
sustainability issues with palm oil. Glycerine is a
co-product of fatty acid production.
Outlook
Shortages are likely to persist through the
second quarter, particularly for palm-based
material.
Vessel delays are not expected to ease be-
fore the second half of the year, and this is
likely to prolong the existing tightness in both
palm oleic and stearic acid. Tallow-derived
product could be more available during the
second quarter.
Players have had less issues securing mate-
rial for the coming quarter than in previous
quarters and some producers seem to have
more volumes available for Q2.
However, the second and third quarters are
typically strong months for biodiesel, espe-
cially cheaper grades like tallow, so there
could be a jump in demand for raw tallow
from this market.
The biodiesel market tends to pay higher
prices for tallow and therefore raw tallow sell-
ers typically prefer to put as many volumes as
possible into the biodiesel market. So availa-
bility of tallow fatty acids could slip again as
the summer months approach.
Demand for cosmetics, personal care and
food applications is likely to remain firm,
though buying interest from the automotive
sector could be hit by rising inflation and fall-
ing living standards. ■
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