Bio plasstics degrades when it decompose. Biomaterials are made from bio sources, but do not degrade.
Market and Technology Foresights for the Oleochemical Industry, and Market Outlook for the Southeast Asia Region W.F. Kee Senior Industry Analyst Technical Insights June 1, 2010
Focus Points Oleochemicals Background Key Drivers and Challenges Value Chain of the Oleochemical Industry Existing and Emerging Applications Technology Roadmap Market Outlook
Oleochemicals Background What are Oleochemicals?
“ 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;
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.
Value Chain of the Oleochemical Industry Value Chain Analysis Crude Palm Oil Crude Palm Kernel Oil RBD Palm Oil RBD Olein RBD Stearin Fatty Acids, Fatty Alcohols, Esters, Glycerine Soap Noodle, Ethers, Amines/ Amides Methyl stearates Soaps, cosmetics, pharmaceuticals, rubbers, plastic, food additives, confectionary OIL PALM PLANTATION CRUSHERS /MILLS REFINERS BASIC OLEOCHEMICALS DOWNSTREAM OLEOCHEMICALS END USER Specialty Fats Palm Fruit - FFBs SPECIALTY FATS
Value Chain of the Oleochemical Industry Typical Profits Along the Value Chain PALM PLANTATION CRUSHERS /MILLS REFINERS BASIC OLEO CHEMICALS DOWN STREAM OLEO CHEMICALS END USER PROFIT MARGIN (% OF TURNOVER) 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%)
Market Foresights Industry Drivers 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 Foresights Industry Challenges 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
Existing and Emerging Application Sectors Biolubricants Existing and Emerging Applications Food Emulsifiers Cosmetics Green Chemicals Bioplastics Biopolymers Soaps and Detergents Misc. Existing Application Sectors Emerging Application Sectors Surfactants
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.
Biopolymers Biopolymers 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 Chemicals The 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.
Market Outlook for Southeast Asia 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. Recommendations Long-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. Overall 2009 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.