Bleak outlook for European fatty acids market - Oleon

20 October 2009 17:43  [Source: ICIS news]

BERLIN (ICIS NEWS)--The best case scenario for the declining European fatty acids market in the next five years will be the stabilisation of consumption but further erosion looks likely, a senior director of an olechemicals producer said on Tuesday.

Eddy Feijen, marketing and sales director of Belgium-based oleochemicals producer Oleon, painted a sombre picture on the near future of European fatty acids when speaking at the 7th ICIS oleochemicals conference in Berlin, Germany.

Feijen said the total EU fatty acid consumption, a combination of European production and global imports, has declined steadily over the last three years, and production is currently at 75% of capacity.

He added this downward trend was likely to continue on its current path before flattening out and did not envisage growth in the immediate future.

“There will probably be further erosion, then stabilisation,” Feijen said.

He explained that although end-user industries will recover and grow in line with GDP, they will increasingly be outsourced to different global regions, in particular Asia.

“Although there will be growth in [end user] demand, the middle industries between fatty acid production and these consumer products will be removed from Europe,” Feijen said, adding, “fatty acids will at best be stable”.

Feijen pointed to a need for innovation and flexibility from oleochemicals producers. He said that European companies should be prepared to offer tailor-made portfolios to consumers, and to develop new chemicals for the changing down-stream market.

He agreed with Rahul Kale, head of biofuels and oleochemicals at Wilmar Oleo, who said new outlets for under-used and over-supplied by-products, such as glycerine, would need to be developed if the industry were to survive.

Furthermore, Feijen predicted a high degree of reorganisation, plant closures and ownership changes as the low profitability of the industry forced companies to streamline and improve efficiency.

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By: Ross Yeo
+44 208 652 3214

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