The oleochemicals market in Europe is currently characterized by significant challenges and opportunities. Three key elements driving the market today are cost fluctuations, supply and demand dynamics, and legislative developments.
Cost Dynamics
Over the past 18 months, the prices of lauric oils — palm kernel oil (PKO) and coconut oil (CNO) — have seen staggering increases. These surges, which doubled prices, have profoundly impacted production costs for many oleochemical manufacturers.
Although energy costs have shown a declining trend recently, they remain elevated compared to pre-COVID levels. These cost pressures necessitate strategic adjustments in sourcing and production processes, along with increased prices for the derivatives’ products, to maintain profitability while meeting customer needs.
Supply and Demand Trends
Demand: Looking back at the second half of 2024, the demand for oleochemicals in Europe was very strong, driven by healthy market needs and a proactive inventory buildup in preparation for the European Union Deforestation Regulation (EUDR), initially slated for implementation in January 2025. As companies position themselves to comply fully with these regulatory changes, there is a strong push for sustainable and responsibly sourced oleochemical products.
Supply: The supply landscape for oleochemicals in Europe is undergoing significant transformation, influenced by both domestic and international factors. Over the past few years, import material has faced many challenges (COVID, Suez Canal blockage and longer shipping routes via the Cape of Good Hope). While some of the problems are gone, some risks remain, and purchasing managers in the oleochemicals industry continue to consider those risks in developing their sourcing strategy for this year and beyond.
The outlook for 2025 remains positive, in general, and European chemical production sites are taking action to minimize costs this year, while keeping in mind that their 2026 suppliers mix could be different given implementation of the EUDR.
Legislative Landscape
The EUDR has been postponed to an expected enforcement date of January 2026. This delay has provided companies with additional time to plan and ensure full compliance. Our organization, P&G Chemicals, has been preparing for this regulation and remains committed to being 100% ready for its implementation.
Acting as a Catalyst for Sustainable Business Growth
Despite the challenges posed by rising costs, shifting supply and demand dynamics, and evolving legislation, P&G Chemicals is dedicated to supporting our customers and acting as a catalyst for sustainable business growth. We aim to continue providing high-quality materials, ensuring local availability and delivering on time.
Furthermore, our portfolio of fatty alcohols, fatty acids, methyl esters and glycerin is created from responsibly sourced natural feedstocks, and we offer a choice of low carbon options to meet the diverse needs of our customers.
My colleagues and I are eager to engage with you to explore how we can help your company leverage the opportunities that 2025 presents, navigate challenges and manage risks effectively. For more information, please visit www.pgchemicals.com.
