Coatings World - November 2014

Southeast Asia has become a hotbed of activity in the oleochemicals production space. This is due to a combination of factors: the abundant availability of raw materials, escalating consumer preference for vegetable-based products and low manufacturing costs.

New analysis from Frost & Sullivan, Southeast Asia Oleochemicals Market, finds that the products manufactured in Southeast Asia are mainly basic oleochemicals that include fatty acids, fatty alcohols and glycerin. In 2013, the revenue of the fatty acid market was $1.26 billion, fatty alcohol was $471.6 million and refined glycerin was $61.1 million. In 2020, these revenues are expected to increase to $2.74 billion, $1.03 billion and $131.9 million, respectively.

“All over the world, the demand for
fatty acids and fatty alcohols is swell-
ing in end-user industries such as cos-
metics, food, plastics, and rubber,” said
Frost & Sullivan Chemicals, Materials &
Food consultant Sharmila Subramaniam.
“Exports of these two derivatives are
also on the rise as the products offered
by many regional participants, especial-
ly those in Malaysia and Indonesia, are
competitively priced and highly valued in
the global market.”
However, the markets are pegged back
by the cost of feedstock. The intensifying
demand for vegetable-based raw materi-
als has had a substantial bearing on the
profit margins of manufacturers, as raw
materials account for 80 to 90 percent of
the costs of fatty acids or fatty alcohols.
Consequently, the frequent fluctuations
in the prices of vegetable oils, such as
palm oil and coconut oil, ripple into the
oleochemicals market.

Oleochemicals manufacturers can
manage price volatility and even stoke val-
ue creation by integrating their business
with upstream plantations. Integration
of raw materials and production in the
supply chain will not only reduce produc-
tion cost but ensure that oleochemicals
manufacturers have a constant supply
of raw materials without compromising
their bargaining power over the suppliers.

“As global consumer preference for natural and environment-friendly products continues to rise, demand from markets such as China, India and the United States will drive the Southeast Asian oleochemicals market,” concluded Sharmila. “The market will also benefit from emerging applications for all three derivatives – fatty acids, fatty alcohols and glycerin – in the areas of biolubricants, green chemicals, bioplastics, biopoly-mers, antioxidants and epichlorohydrin.”

Southeast Asia Oleochemicals Market is part of the Chemicals Growth Partnership Service program. Frost & Sullivan’s related studies include: Western European Market for Amino Acids and Specialty Protein Ingredients for Human Applications, Impact of U.S. Shale Gas Boom on Middle East Petrochemical Feedstocks, Global Advanced Lead Acid (ALA) Batteries Market and Global Automotive Biofuels Market. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

World Fluorochemical
Demand to Reach 3. 8
Million Metric Tons

Global demand growth for fluorochemi-
cals is forecast to accelerate, rising 3. 8
percent per year to 3. 8 million metric tons
in 2018. Above average growth in higher
value products will help drive increases in
value demand more than seven percent
annually to $25 billion. Environmental
regulations will continue to be the stron-
gest force acting on the industry, shaping
demand in both positive and negative
ways.
While regulations and consumer con-
cerns have reduced demand for some
fluorine-based products, particularly
fluorocarbons, they have also opened
up opportunities for products such as
newer fluorocarbons with low global
warming potential. China is the largest
fluorochemical market in the world and
produces over half of global output, ben-
efitting from its strong position in the raw
material fluorspar. While fluoropolymers
are the smallest product in volume terms,
they account for a disproportionate share
of market value due to their higher aver-
age prices. These and other trends are
presented in “World Fluorochemicals,”
a new study from The Freedonia Group,
Inc., a Cleveland-based industry market
research firm.

“The fluorocarbons market remains
the most dynamic sector of the fluoro-
chemical industry for two reasons: first,
the evolving regulations aimed at protect-
ing the ozone layer and reducing global
warming, and, second, a sharp contrast
in the outlook between developed and
developing countries,” said analyst Ryan
Sullivan.
In developed countries, the phaseout
of HCFCs is nearly complete, with most
end users switching to HFCs. However,
even HFCs now face restrictions due to
their global warming potential (GWP),
with new laws in developed countries ex-
pected to limit future demand.

China will continue to be the largest and one of the fastest growing markets for fluorochemicals, accounting for over 40 percent of global volume demand in 2018. Only India will experience faster growth, although from a much smaller base. Developing countries in general are expected to see faster growth in fluorochemical demand as healthy economic growth drives rising commercial and household refrigeration penetration rates and countries increasingly adopt more advanced manufacturing technologies that employ fluoropolymers. Demand growth in North America will rebound due to healthy advances in the automotive industry and an improving housing market in the United States. CW