Oleochemicals are chemical compounds derived from natural oils and fats. They are known for their environmentally friendly properties, including biodegradability and low toxicity. Fatty acids, fatty alcohols, glycerin, and methyl esters are among the basic oleochemicals used as raw materials or intermediates in various industries. These fundamental oleochemicals are produced through a range of chemical and enzymatic reactions, including water-based hydrolysis, transesterification, hydrogenation, and alcohol-based alcoholysis.
Oleochemicals find diverse applications in various industries, including Soaps & Detergents, Personal care & cosmetics, Plastics & Polymers, Lubricants, Chemical Intermediates, Pharmaceuticals, Household & Industrial Cleaning, Food & Beverages, and Others such as tobacco, coatings, and textiles. In the Personal care & cosmetics industry, oleochemicals are commonly used as a thickening agent and are considered safe, with minimal or no presence of carcinogens. The largest application of oleochemicals lies in the Soaps & Detergents sector, where they are utilized in the production of sodium lauryl sulfate and other ingredients used in Personal care and Soaps & Detergents.
Global Oleochemicals demand was estimated to be over 17,000 thousand tons which is expected to grow to cross 27,000 thousand tons by 2032, at a CAGR of 5%. Global demand for Oleochemicals is driven by increase in demand of Soap & Detergents, Personal Care, Plastics & Polymers, Lubricants, Chemical Intermediates, Plastics, and Other applications. Of the total Oleo-chemicals consumed in 2022, over 40% were used in the soaps & detergents segment. It is expected to remain the largest application for Oleo-chemicals globally, with a growth forecast at a CAGR of 4.2% in the long-term forecast till 2032.
Oleochemicals demand for Personal Care applications is likely to grow at a rate of 5.4% to cross 4,100 thousand tons by 2032. Plastics and Polymers are estimated to be the fastest growing application of Oleochemicals and witness a CAGR of 7% during the long-term forecast due to high demand in major markets like China.
The consumption of glycerin for the production of epichlorohydrin has witnessed a significant increase in China. In 2020, China imported approximately 1,000 thousand tons of glycerin and over 2,000 thousand tons of oleochemicals overall. As the largest manufacturer of plastics and polymers globally, China accounts for a substantial share of oleochemical consumption in the plastics & polymers industry.
The growing demand for environmentally friendly chemicals in plastics and polymer applications is expected to drive the demand for oleochemicals in the forecast period. The Asia Pacific region presents abundant growth opportunities for oleochemicals. Although there may be existing production capacities in the region, the rise in demand for oleochemicals is projected to balance the demand-supply dynamics in the long-term forecast.
Fatty acids account for more than 50% of the global oleochemicals demand and are projected to grow at a rate of 5% during the period 2023-2032. They play a crucial role in driving the demand for eco-friendly compounds. Fatty acids are vital components of oleochemicals and are formed through the splitting of triglyceride molecules into fatty acids and glycerin. These basic oleochemicals can be produced from any oil or fat through reactions with water at high pressure and temperature conditions or through enzymatic reactions. Fatty acids serve as key raw materials and intermediates in the production of a wide range of products, including soaps, detergents, pharmaceuticals, personal care products, plastics and polymers, food and beverages, and lubricants.
Their versatile applications make them essential ingredients in the manufacturing of various industrial and consumer goods. In recent years, the personal care and cosmetics industry has witnessed a significant shift towards sustainable and natural ingredients. Fatty acids, with their skin-friendly properties and diverse functionalities, have become integral in formulating various personal care and cosmetics products such as moisturizers, creams, shampoos, lotions, and cosmetics. The growing demand for eco-friendly and skin-friendly ingredients in this industry is expected to drive the growth of fatty acids in the oleochemicals market.
Asia-Pacific recorded the largest demand for Oleochemicals in 2022 with a whopping more than 50% of global demand and is likely to increase its market share to around 65% by 2032. The demand in Asia-Pacific is estimated to grow at a CAGR of 6.5% where Indonesia, Malaysia, Thailand, Philippines, China, and India are the major manufacturers of oleo-chemicals in the region. These countries have an abundant supply of natural resources, well-developed infrastructure, and a strong focus on the chemical industry, enabling them to meet the growing demand for oleochemicals. In the forecast period, the Asia Pacific is estimated to dominate the global oleochemicals market as a result of its large consumer base, robust manufacturing capabilities, and growing adoption of sustainable practices. and favorable economic conditions.
IOI Corporation Bhd (IOI Corp) completed the construction of the new oleochemical plant in Penang, Malaysia with an installed capacity of 110 thousand tons. The new capacity addition is expected to boost IOI Corporation Bhd's Oleochemicals capacity to almost 900 thousand tons.
In February 2023, Global Green Chemicals Plc (GGC) has announced its commitment to invest towards the development of innovative oleochemical-based products. This strategic move is aimed at not only expanding their product portfolio but also generating increased revenue for the company. The company is planning to invest 2 billion baht to support the growth of its oleochemical business.
In April 2023, KLK Emmerich GmbH (“KLKE”) a subsidiary of KLK OLEO, has recently completed its acquisition of a controlling stake in Temix Oleo SpA (“Temix Oleo”). Temix Oleo operates a Fatty Acid and Esters production facility in Calderara, Italy with production capacity of 50 thousand tons and 25 thousand tons respectively.
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