Market Survey of Fatty Acid

1. Classified by types of oleochemicals

The manufacturing of oleochemicals deals with a series of chemical reactions for the
production process to manufacture oleochemicals product like fatty acids and fatty
alcohols with glycerine as by-product. The hydrolysis of fats result in 95% production
of fatty acids and glycerine is produced as a by-product. These fatty acids are further
utilized for the production of fatty alcohols and methyl esters. Fatty acids are expected
to dominate the global oleochemicals market by type and are estimated to control
around 51% of the total oleochemicals consumption by type in 2021. The global
market size is estimated to reach USD 31.7 billion by 2021 at a CAGR of around
4.9% during the forecast period of 2016 and 2021.

Based on types, oleochemicals is classified into:

Fatty Acids
Fatty Alcohols
Glycerine
Fatty Acid Methyl Esters and
Fatty Amines

Figure : Oleochemicals Market Revenue classified by type in 2015 (%). (Source:

Expert Insights and industry ARC Analysis)

2. Classified by world consumption of fatty acids

Asia is the largest fatty acidproducing region in the world, with 49% of total world
production. Malaysia, China, Indonesia, and India combine for 91% of Asian fatty
acid production. Indonesia and Malaysia are the worlds leading palm oil producers
and have raw material advantages. However, the rapid rise of fatty acid capacity in
Malaysia has led to very low operating rates. The majority of fatty acids produced in
Malaysia and Indonesia will continue to be exported. Pie chart below showed the
world consumption of fatty acid in year 2014.
Asia is the largest fatty acidconsuming region in the world, with 41% of total global
consumption. China is the main consuming driver in the region, with over 60% of
Asias total consumption and a high annual growth rate of nearly 5.4% expected over
the forecast period. China is anticipated to account for 29% of global consumption by
2019. The main use for fatty acids in Asia is soap production.

Figure : World consumption of Natural Fatty Acids in 2014 (%). (Source: HIS
Market, 2015)

3. Classified by chemical profile of fatty acids

Supply in Asia has increased significantly over the last five years on strong growth of
the oleochemicals industry as well as rapid capacity expansions especially in
southeast Asia, which accounts for around 80% of global fatty acids production. From
2010-2015, global fatty acids capacity more than doubled. Capacity in both China and
India more than doubled, and it nearly tripled in southeast Asia, with Indonesia seeing
five-fold growth. With capacity growth outpacing demand, the market is expected to
remain oversupplied for at least the next five years. And with the reduction in palm oil
yield, Malaysia and Indonesia have amended their tax policies to discourage raw
material export. As a result, costs for producers outside these countries have
significantly increased, making them less competitive. Demand for fatty acids in Asia
has weakened considerably over the last two years as a result of the slowdown in the
global economy, particularly in the key consumer market of China.
Figure : Revenue of different fatty acid composition in year 2015-2016. (Source:
ICIS, 2016)

Table : List of oleochemical companies in Malaysia (Exporters)

Figure : Malaysian Export volume of oleochemical products in year 2015. (source:
MPOB, 2016)

Figure: Typical composition of fatty acids in palm oil.