OUTLOOK ’19: Europe fatty acids, fatty alcohols demand dependent on potential lower economic growth

LONDON (ICIS)–The outlook for European fatty acids and fatty alcohols market growth is heavily dependent on macroeconomic factors for 2019, with potential lower automotive demand haunting the fatty acids market.

Production issues continue to mar the outlook for fatty alcohols availability.

FATTY ACIDS
While demand from the automotive industry is expected lower in 2019, other fatty acids end markets are forecast to post a relatively stable demand outlook, like the home and personal care industries.

However, there are some concerns over buying interest during 2019 for downstream resins and coatings.

The automotive industry is bracing for a drop in demand due to changing regulations and economic factors, which would drive down buying interest for both coatings and resins.

Passenger car demand in the EU fell 8% in November month on month, continuing the downwards trend posted in the second half of 2018.

Political uncertainty is muddying the outlook for 2019, with demand possibly set to be hit by cautious players.

However, some market participants are hopeful that a healthy number of bookings for the first quarter is indicative that buying interest remains strong.

Healthy imports of fatty acids are expected for 2019, though imports do fluctuate heavily from month to month dependent on trade in other regions.

FATTY ALCOHOLS
The European fatty alcohols growth outlook for 2019 is also heavily dependent on economic factors, as the important downstream surfactants market is largely driven by the global economy’s trends.

The downstream ethoxylates market is anticipated to be fairly calm in the first quarter of 2019, while cracker maintenances planned for the second quarter are expected to tighten availability.

This is likely to push up fatty alcohols demand as players strive to recover from shortages.

Ethoxylates are a type of surfactant produced by combining fatty alcohols with ethylene oxide (EO).

There are some fears that an economic downturn is on the way in 2019, which would typically drive down demand for several products, including surfactants.

Current fatty alcohol production issues in the region are expected to continue for at least the first quarter of 2019, with some problems to continue until the fourth quarter.

At least two force majeures were in place at fatty alcohols plants in Europe during the fourth quarter of 2018, according to sources.

A force majeure at Shell’s Stanlow, UK, synthetic fatty alcohols plant is likely to remain in place until the fourth quarter of 2019.

The company had not responded to a request for comment at the time of writing.

Moreover, at least one plant is expected to enter into a planned maintenance in the first quarter.

While there is still uncertainty over fatty alcohols demand levels for 2019, most players are bracing for tightness, particularly in the first quarter.

Focus article by Samantha Wright