- Natural fatty acids largest segment of the oleochemical industry
- Oleochemicals used in a variety of industries
- Market tends to be regional because of problems with transportation
The market for natural fatty acids in the oleochemical industry is forecasted to reach $16.2 billion globally by 2021, according to a report by BCC Research. This represents a compound annual growth rate (CAGR) of 5.6%, as the market was valued at $12.4 billion in 2016.
Natural fatty acid is the raw material used to produce oleochemicals. It is renewable, sustainable and readily biodegradable.
Fatty acids typically have two reactive sites which makes the molecule a starting material for a number of reactions.
Oleochemicals are used to create specialty chemical formulators for many different markets. These chemicals must be affordable while meeting or surpassing performance specifications. They also must be suitable for human contact, both externally and if ingested, and must have natural origins. In addition, they must meet environmental, health, and safety legalization and regulations.
Governmental tax-break incentives are available for companies that use biomass to produce fuel products or energy as well as for major tropical oil plantation nations that use local companies.
The incentives, however, have negative effects. Self-sufficient energy incentives has driven up the cost of raw material for producers and tighten the supply. Export taxes make it prohibitive for nations outside Asia-Pacific to source fatty acid raw material, giving local producers an unfair monetary advantage over the competition.
Growth in the industry has destroyed ecological-systems arable land and that cannot recover. The industry now meets growing demands while being sustainable to protect the supply chain.
Global Oleochemical Markets
More than 65% of the industry’s overall capacity is based in Asia-Pacific.
Fatty acids are highly regional because they are expensive to transport long distances. They oxidize from exposure to air, there is color and odor reversion, they partial crystallize and metal is used for pick-up.
Glycerin is an important and profitable byproduct of the fatty-acid industry. It is automatically generated when either fats or oils are hydrolyzed although the amount varies depending on the starting material. Animal fats or softer oils generate less glycerin than with harder oils.
Recently, glycerin prices have collapsed as a glycerin supply from the biodiesel market has flooded the fatty-acid market, negatively impacting the profitability of fatty-acid operators. This oversupply, however, has created new markets for glycerin.
- In 2016, the derivatives market was valued at $6.2 billion. It is forecasted to reach $8.5 billion by 2021, growing at a CAGR of 6.8%.
- In 2016, the personal care, cleaning products, polymerization, and vulcanization markets were valued at $5 million. They are forecasted to reach $6.2 billion by 2021, growing at a CAGR of 4.7%.
- The major acid types are distilled fatty acids, fractionated fatty acids, monounsaturated oleic acid, polyunsaturated (including tall oil fatty acid: TOFA), and stearic acid.