Oleochems see further restructuring ahead - European conference

20 October 2009 19:34  [Source: ICIS news]

BERLIN (ICIS news)--Consolidation in the oleochemicals market is expected to continue worldwide, several producers said on Tuesday at an industry conference in Europe.

In Europe, low profitability within the fatty acid industry is expected to be the major driver for further restructuring, facility closures and ownership changes, said Eddy Feijen, marketing and sales director at Belgium-based Oleon, speaking at the ICIS Oleochemicals conference in Berlin.

“The European fatty acid market today is not growing and is even shrinking,” Feijen said.

“Fatty acid capacity is currently underutilised. We also expect glycerine to remain oversupply in the near to mid-term,” he added. 

The US oleochemical environment also remains tough, said Bob Drennan, chairman of the board of US-based Vantage Specialty Chemicals. 

He listed recent ownership changes for several US oleochemical companies.

Vantage Specialty Chemicals was formerly Uniqema Americas; PMC Biogenix was the former oleochemicals business of Chemtura; and Emery Oleochemicals was formerly Cognis Oleochemicals. Twin Rivers Technologies is now owned by Malaysia-based FELDA; and Dial’s soap manufacturing plant in Chicago is now owned by India-based VVF.

“The chemical industry as a whole is a tough business but oleochemicals require even better general management and good asset management,” Drennan said.

“Consolidation synergies could be further sought to boost profitability for oleochems,” he added.

In southeast Asia, oleochemical overcapacity is also prevalent, said Cheah Seng Chye, general manager for fatty acids at Malaysia-based IOI Oleochemical Group. He said that Asian oleochemicals demand was currently at 2m tonnes and overall plant capacity at 7.7m tonnes, excluding soap manufacturing.

“There have been delays on plants expansion in Asia due to global economic slowdown,” Chye said.

“Worldwide, global utilisation of oleochemical capacity is seen at 60-65%. In Indonesia, some plant utilisation is even less than 50% of capacity,” he added.

Chye said he expects oleochemicals demand to improve because of faster economic recovery in China and India, as well as improving Asian demand in pharmaceuticals, personal care, food, plastics and rubber markets. 

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By: Doris de Guzman
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