Oleochemicals outlook positive, despite capacities expansion

17 January 2014 17:09 Source:ICIS News

SINGAPORE (ICIS)--The overall outlook for the oleochemicals industry is optimistic in the medium to longer term, despite several new capacities and expansion, said industry participants during the 2nd Asian Oleochemicals conference in Kuala Lumpur, Malaysia.

In the next three years, oleochemicals production capacities are expected to grow by 30%, according to Tan Kean Hua, executive director of IOI Oleochemicals.

The expansion in Indonesia, mostly driven by the government’s lower export tax in refined palm oil products as compared with Malaysia in 2011, resulted in a flurry of downstream investments, industry participants added.

Currently, Asian fatty alcohols capacity is at around 4 million tonnes/year, compared with fatty acids capacities of around 11.3 million tonnes/year in Malaysia, Indonesia and China, according to Tan. An additional 1 million tonnes/year of fatty alcohols capacities are expected to be on-stream in 2014-15.

Market players were optimistic that higher demand from China, India and Indonesia is expected to absorb the increments in supply, driven by higher population, GDP and disposable income growth.

The oleochemicals market demand from China in 2012-20 is expected to grow by 5-7% for fatty acids and fatty alcohols, said Dr Pek Lee Choo, associate principal at Linden Tree Partners.

Key trends for oleochemicals market drivers would be in homecare, industrial, institutional and oilfield and biodiesel applications, Dr Pek added.

By Alexis Gan