Market and Technology Foresights for the Oleochemical Industry and Market Outlook for the SEA Region
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Transcript of Market and Technology Foresights for the Oleochemical Industry and Market Outlook for the SEA Region
Market and Technology Foresights for the Oleochemical Industry,
and Market Outlook for the Southeast Asia Region
W.F. KeeSenior Industry Analyst
Technical InsightsJune 1, 2010
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Focus Points
Oleochemicals Background
Key Drivers and Challenges
Value Chain of the Oleochemical Industry
Existing and Emerging Applications
Technology Roadmap
Market Outlook
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“Oleochemicals” refer to chemicals derived from natural oils and fats of both plant and animal origin.
In the last decade, the oleochemical industry has been growing steadily due to increased global demand for more environment-friendly products. This is because of oleochemicals’ attractive traits;
•Derived from renewable resources; •Non-toxic;•Readily biodegradable.
As such, oleochemicals are greener alternatives to petrochemicals, which are obtained from exhaustible or non-renewable fossil fuels.
In Southeast Asia, the major raw material being used to produce oleochemicals are palm oil, palm kernel oil, and coconut oil, as these crops are grown abundantly in this region.
The main oleochemicals manufactured in Southeast Asia are fatty acids, glycerine, methyl esters, and fatty alcohols. .
Oleochemicals BackgroundWhat are Oleochemicals?
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Crude Palm Oil Crude Palm Kernel Oil
Crude Palm Oil Crude Palm Kernel Oil
RBD Palm OilRBD Olein
RBD Stearin
RBD Palm OilRBD Olein
RBD Stearin
Fatty Acids, Fatty Alcohols,
Esters, Glycerine
Fatty Acids, Fatty Alcohols,
Esters, Glycerine
Soap Noodle,Ethers,
Amines/ AmidesMethyl stearates
Soap Noodle,Ethers,
Amines/ AmidesMethyl stearates
Soaps, cosmetics,
pharmaceuticals, rubbers, plastic, food additives, confectionary
Soaps, cosmetics,
pharmaceuticals, rubbers, plastic, food additives, confectionary
OIL PALM PLANTATION
CRUSHERS /MILLS
REFINERS
BASIC OLEOCHEMICALS
DOWNSTREAM OLEOCHEMICALSEND USER
Specialty Fats
Specialty Fats
Palm Fruit - FFBsPalm Fruit - FFBs
SPECIALTY FATS
Value Chain of the Oleochemical IndustryValue Chain Analysis
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Value Chain of the Oleochemical IndustryTypical Profits Along the Value Chain
PALM PLANTATION
CRUSHERS /MILLS
REFINERS BASIC OLEOCHEMICALS
DOWNSTREAM
OLEOCHEMICALS
END USER
PR
OF
IT
MA
RG
IN (
% O
F T
UR
NO
VE
R)
CHAIN
SPECIALTY FATS
< 3%
10-18%
50-100%Profit Margins are higher for Plantation companies due to high price of
FFB in 2008/09.
Profit Margins are lower for processing companies due to high raw material cost, forcing processors to run below capacity in 2008/09.
3-6%(10-15%)
5-10%(8-15%)
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DRIVERS 1-2 years 3-5 years
Higher demand of oleochemicals coming from consumer market
HIGH HIGH
Wide availability of raw material Medium Medium
New uses and new demand Low Medium
Growing markets for green chemicals Low Medium
Market ForesightsIndustry Drivers
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CHALLENGES 1-2 years 3-5 years
Global downturn of economy HIGH Medium
Cash rich plantation companies eyeing the market, increases threat to existing participants
Medium Low
Growth of biodiesel industry Medium Low
Occurrence of “boom and bust” cycle Medium Low
Market ForesightsIndustry Challenges
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Biolubricants
Existing and Emerging Application Sectors
Existing and Existing and Emerging Emerging
ApplicationsApplications
Food Emulsifiers
Cosmetics
Green Chemicals
Bioplastics
Biopolymers
Soaps and Detergents
Misc.
Existing Application Sectors Emerging Application Sectors
Surfactants
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Biolubricants Future …
Cost & Properties Regulations
• Biolubricants are 2,5 to 3,0 times more expensive than conventional but also half as much as fully synthetic lubricants
• Vegetable oils present issues with their oxidative and temperature stability
• European Eco-label harmonises specifications across European countries
• National legislation and initiatives in Germany, Austria, Switzerland, Sweden, France and Portugal
SUSTAINABILITY
It is expected that by 2030 the majority of lubricants will be made biodegradableIt is expected that by 2030 the majority of lubricants will be made biodegradable
Negative Positive
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Other Emerging Applications
Bioplastics
In the industrial sector, bioplastics hold applications chiefly in market sectors such as packaging, electronics, automotive and agriculture. For now, bioplastics have the largest application in the packaging industry.
BiopolymersBiopolymers are a new and exciting area of research in the medical field, inciting tremendous optimism to be employed in three main end-sector applications, namely the medical devices, tissue engineering and the drug delivery market.
Environmentally friendly plastics may be made from sugar cane.
Tissue heart valve made with biomaterials.
Green ChemicalsThe emergence of oleochemicals as a viable in applications such as detergents and personal care products will also see the gradual replacement of petroleum derivatives with vegetable oil-derivatives in applications such as paints, coatings, and adhesives.
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Technology Roadmap
Present 20252015 2020
TIMELINE
Ap
plic
atio
n
Biolubricants
Bioplastics
Green chemicals
Biopolymers
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Market Outlook for Southeast Asia
Fatty Alcohol (2010)A growth of more than 5% is expected. Nevertheless, prices is expected to remain steady.
Fatty Alcohol (2010)A growth of more than 5% is expected. Nevertheless, prices is expected to remain steady.
Refined Glycerin (2010)Asian refined glycerine prices is expected to remain low due to oversupply. Overall regional supply of refined glycerine is projected to exceed 400,000 tonnes. Demand for refined glycerine is expected to grow at a slower pace of 5.8%. Anticipation is on new downstream applications for refined glycerine (e.g. epichlorohydrin plants), coming online in 2012.
Refined Glycerin (2010)Asian refined glycerine prices is expected to remain low due to oversupply. Overall regional supply of refined glycerine is projected to exceed 400,000 tonnes. Demand for refined glycerine is expected to grow at a slower pace of 5.8%. Anticipation is on new downstream applications for refined glycerine (e.g. epichlorohydrin plants), coming online in 2012.
RecommendationsLong-term prospects seem to be profitable as there is a trend to shift from petrochemicals to oleochemicals. Southeast Asian companies with the advantage of economies of scale in base oleochemicals would likely gain from this opportunity.
To withstand the current challenges in the industry, a high level of integration is a key factor for survival in this market.
RecommendationsLong-term prospects seem to be profitable as there is a trend to shift from petrochemicals to oleochemicals. Southeast Asian companies with the advantage of economies of scale in base oleochemicals would likely gain from this opportunity.
To withstand the current challenges in the industry, a high level of integration is a key factor for survival in this market.
Overall2009 was an exceptionally tough year for the global oleochemicals market. The first half of 2009 witnessed some of the slowest business conditions on record. Although a slight recovery was seen in the second half of 2009, however, profitability is still down, especially for fatty acid and glycerine producers. In 2009, Southeast Asian companies were operating at a level of 10 percent or below-profit margins.
Overall2009 was an exceptionally tough year for the global oleochemicals market. The first half of 2009 witnessed some of the slowest business conditions on record. Although a slight recovery was seen in the second half of 2009, however, profitability is still down, especially for fatty acid and glycerine producers. In 2009, Southeast Asian companies were operating at a level of 10 percent or below-profit margins.
Fatty Acid (2010)Demand for fatty acids is expected to be strong, in line with demand growth for consumer products such as cosmetics and plastics. If palm oil prices continue to rise, fatty acid prices will go up as well. Regional output is estimated to be at about 3.5 million MT.
Fatty Acid (2010)Demand for fatty acids is expected to be strong, in line with demand growth for consumer products such as cosmetics and plastics. If palm oil prices continue to rise, fatty acid prices will go up as well. Regional output is estimated to be at about 3.5 million MT.
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• The global market for oleochemicals has been thrown in the air due to the current turbulence in the market, pricing of raw materials, and the degradation of downstream markets.
• However, these markets present opportunities (especially in Asia), and some companies may have assets for sale.
• Frost & Sullivan feels more bullish about the fatty acids market, then it does with regards to the other oleochemicals which may show signs of greater competition.
• Consolidation is expected in the market and certain players will fall out.
• Growth is likely to be concentrated in Asia but logistics costs have come down making the US accessible again.
• Margin have been hit but should be recovering soon.
• Key to watch out will be higher CPO prices again.
• “Greening” of the chemicals industry presents opportunities for supply into paints, coatings, cosmetics, lubricants, plastics etc
• Companies who are dynamic during recession grow significantly better than companies which “wait to see what happens”
Conclusion
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For Additional Information
W.F. KeeSenior Industry AnalystTechnical Insights+603 6207 [email protected]