Oleochemicals industry to grow in the near term with Asia-Pacific leading

Friday 22 Nov 2024

KUALA LUMPUR (March 5): The global oleochemicals industry is set to expand at least until 2029 with the Asia-Pacific leading in the regional share and growth rate, according to Nikhil Vallabhan, director of chemicals, materials, and food practice at business consulting firm Frost & Sullivan.

He said the compound annual growth rate (CAGR) of oleochemicals in the global market is expected to be maintained at around 3.5% to 4% by volume from 2023 to 2028 and around 5% to 5.5% by revenue from 2024 to 2029.

Drivers for the industry's growth include the greater usage of oleochemicals as additives in plastics processing and their ability to offer the same functionality and performance as petroleum chemical sources, he noted.

The estimated value growth of over 5% should indicate that prices for various oleochemical products are expected to improve because of the value addition in markets such as Europe and North America, particularly in personal care, cosmetics, soaps and detergents, he said.

“We are looking at a total volume of approximately 30 million tonnes of oleochemical products by 2028 or 2029,” Vallabhan said during his presentation at the 35th Palm & Lauric Oils Price Outlook Conference & Exhibition.

He emphasised that the Asia-Pacific region would lead in market share and growth as several industries that require oleochemicals have moved there due to better economies and logistics.

“China continues to be one of the largest consumers of various types of oleochemicals. Even though the growth might not be coming from China specifically, the sheer volume of consumption required in China still makes it a very attractive market to be in. It is a market that we cannot completely neglect,” he said.

“As producers of oleochemicals in the Asia-Pacific market, countries such as Malaysia, Korea, Japan and India are your go-to countries at the moment,” he added.

On the other hand, Vallabhan said the North American market had reached a stage of maturity with its demand becoming relatively slower, while the European market could be maturing by 2030 as well.

Nevertheless, he said the margins will be greater when supplying to European customers, largely due to the growing luxury cosmetics sector in Europe, with an increase in per capita spending on luxury personal care products.

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