What are Oleochemicals? Oleochemicals are organic compounds that can be derived from various natural sources such as plant and animal fats. They can be derived from vegetable oil such as corn, soybean, and sunflower. They can be derived from animal fats such as lard, rendered fats, fish, and tallow. Fatty alcohols, glycerin, fatty acids, and methyl esters are the most popular oleochemical types that are available in the global market as they are useful in a range of applications. The oleochemicals manufacturing process involves processing animal fats and natural vegetable oils into different substances. Hence, the manufacturing process depends on what needs to be produced.
The process of splitting or cleavage is used to produce fatty acids which is one of the most useful oleochemical substances. In this process, the triglycerides molecule is split into different parts such as fatty acids and glycerin. The manufacturing process of substitution is used for biodiesel production. Substitution is a process where transesterification of glycerin with methanol takes place. This takes place in the triglycerides molecule too. In order to produce glycerin, glyceric aqueous solutions are processed which are derived from the processes of splitting and transesterification. Depending on what needs to be derived, different types of chemical reactions are used in the process.
The oleochemicals market had a global production size of 11.4 MMT. Out of this, the highest production was from the Asia Pacific region as it contributed to 8.208 MMT. Western Europe’s production size was 1.596 MMT and North America production size was 1.14 MMT. In 2016, the fatty acid global production was 9.3 MMT while the global consumption was 3.4 MMT. In the same year, the fatty alcohol global production was 4.85 MMT while the global consumption was 2.53 MMT. According to the 2020 market intelligence report by Beroe, the top producing countries of fatty acids are Asia, EU, and North America as they contribute 72%, 14%, and 10% respectively.
When it comes to key producers of fatty alcohol, Asia produces 50% of fatty alcohol, the EU produces 23% of fatty alcohol, and North America produces 21% of fatty alcohol. Beroe’s research has found that the key exporting countries are Indonesia, Germany, Malaysia, the US, and the Netherlands. Indonesia exports 27%, Malaysia exports 25%, the Netherlands exports 11%, Germany exports 9%, and the US exports 6%. The key importing countries of oleochemicals are China, Italy, the Netherlands, Germany, and the US. China imports 14%, the Netherlands imports 11%, the US imports 9%, Germany imports 8%, and Italy imports 7%.
The best sourcing regions are mainly Indonesia, China, and Malaysia. The oleochemicals market has various global suppliers. The top ones are IOI Group, Wilmar, Kuala Lumpur Kepong Berhad (KLK), and BASF. Currently, there is fierce competition among suppliers in the oleochemicals industry. There are many diverse multinationals that are competing with the local suppliers in the market and there is likely to be more competition in the near future. As the demand for oleochemicals increases because people are using more products that have these compounds, more suppliers are entering the market.
The global oleochemicals market was valued at $17,964 million in 2016 according to reports. By 2023, the expected market size will value more than $28,700 million. Experts have predicted that the market will grow at a CAGR of 7.0%. There is more supply than demand at present of fatty acids and fatty alcohols. Beroe’s forecast suggests that the oversupply of oleochemicals will continue for a few years because overproduction is likely to continue as many suppliers are planning capacity additions. Moreover, a dip in China’s demand for oleochemicals will add to the oversupply in the coming years.
One of the oleochemicals market trends is that people are moving towards natural oleochemicals. Natural oleochemicals constituted 75% of the global market share in 2017. There is a higher demand than ever before as people are interested in biodegradable and sustainable products. Moreover, regulations such as REACH are encouraging the use of oleochemicals and this is going to improve the market growth. Oleochemicals are going to be used as replacements for petrochemicals which will help drive the growth of the market. Oleochemicals can be used in a wide range of applications and so this will help drive the growth.
The oleochemicals market growth will result from a rise in demand in particular sectors such as Thailand and India which are slowly becoming better economically. This is because of a growing population and a better standard of living in these regions that will push the market to grow. In addition, an increase in demand for FMCG, biodiesel, bio-lubricants, bio-surfactants, and biopolymers will drive the growth even further. Beroe predicts that the fatty acids market will grow at a faster rate than other oleochemical types because of the profitability factor. One of the constraints that can slow down the growth is the raw material prices that are volatile.
