European Oleochemicals Market Update January, 2021

Summer is typically a slower period in Europe for oleochemicals, with the agrochemical business in a seasonal lull and the summer holidays reducing business activities, depending on the country. This summer, Europe is also learning how to reopen with COVID-19 while containing the resurgent pandemic once again. Additional pressure on supply chains is being imposed by the low water levels on the Rhine River due to weeks of warm, dry weather, with slowdowns in barge activities and low water surcharges.

Within that framework, the European oleochemical market seeks to stabilize under a new normality. Volatile demand and spot requests have increased, driven by local availability challenges due to coronavirus. For P&G Chemicals, we were pleased to see some of our customers hardest hit by the crisis start ordering again for Q3, indicating perhaps a timid business recovery. Healthy demand for fatty alcohols is primarily driven by cleaning and personal care applications, with mid-chains continued supply and long-chains availability more limited. In parallel, RSPO MB demand maintains the strong momentum across products, reinforced by the continuous focus on Sustainability by our customers and end users.

On the short-chains, balancing the different pure cuts is leading to constrained supply and higher prices on certain products. As agrochemical companies prepare for the upcoming high season, the greater C10 demand is exceeding what the timidly recovering C8 demand can support, leading to an availability crunch. The C8 vs C10 pricing is inverting vs their past relationships.