The Changing World of Oleochemicals
Wolfgang Rupilius* and Salmiah Ahmad**
INTRODUCTION Never before in the history of oleochemicals have the changes been more dramatic than in the last 25 years. Before discussing these developments, I would like first to define the term oleochemicals and basic oleochemicals as used in this paper. DEFINITIONS Oleochemicals are generally chemical products derived from animal or vegetable triglycerides, even if they contain elements of petrochemical origin. Basic oleochemicals are fatty acids, fatty alcohols, methyl esters and glycerine (Figure 1). RAW MATERIALS FOR BASIC OLEOCHEMICALS The worldwide production and consumption of fats and oils are shown in Figure 2. Although only 14% of the total production of fats and oils is used for oleochemicals, there are some selective MARKETS FOR BASIC OLEOCHEMICALS Figures 4, 5 and 6 show that basic oleochemicals are used in many different industries. Until a few years ago, methyl esters had only limited use as intermediates for the production of fatty alcohols. With the development of biodiesel in Europe, they have become by far the fastest growing basic oleochemicals. GLOBAL DEVELOPMENTS IN THE OLEOCHEMICALS INDUSTRY In this section, the most important developments that have affected the oleochemicals industry in the last 25 years will be discussed. ASEAN Growth The rapid growth in production of palm oil and palm kernel oil in ASEAN has made the development
Figure 2. Worldwide production and consumption of oils and fats in 2003 (million tonnes).
triglycerides, like coconut, palm kernel and high erucic rapeseed oil that are mostly so used (Figure 3). In the future, the growth of oleochemicals based on these raw materials may be limited by their availability, if the right corrective measures are not taken in time.
Figure 1. Basic oleochemicals.
* Karl-Marx-Dam 99 D-15526-Bad Saarow, Germany. E-mail: firstname.lastname@example.org ** Malaysian Palm Oil Board P. O. Box 10620, 50720 Kuala Lumpur, Malaysia.
Figure 3. Raw materials for oleochemical.
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The Changing World Of Oleochemicals from page 15
of the oleochemicals industry in this part of the world possible. ASEAN is constantly increasing its world market share of fatty acids and fatty alcohols (Figures 7 and 8). Until 2003, the same phenomenon was observed with glycerine. This situation is now changing dramatically, since Europe is strongly increasing the production of glycerine, a co-product of the biodiesel manufacturing process. Exit of the Traditional Players Figure 4. Market for oleochemical - fatty acids.
Figure 5. Market for oleochemical - fatty alcohols.
Figure 6. Market for oleochemical - glycerine.
Figure 9 shows that the prominent western producers of basic oleochemicals are either selling or limiting their activities in this area. Henkel, Unilever and Petrofina have sold all their oleochemicals activities. Procter & Gamble has closed or sold their fatty acid production plants in the USA, but continues to expand in fatty alcohols and glycerine. Akzo announced the intention to sell its fatty acid activities. From the traditional global companies which developed the oleochemicals industry more than 100 years ago, only Kao Corporation remains fully committed. The driving force behind this exit strategy is in large part the low profitability and the large capital required for world scale operations. Companies like Henkel, Unilever and Procter & Gamble are focusing their activities on consumer goods, a business which in general is less capital intensive and more profitable than basic oleochemicals. The fast development of oleochemicals production capacity in ASEAN, with its very strong raw material integration, is the most important reason for the drastic reorganization taking place in the global oleochemicals 21
Palm Oil Developments 44
scenario. The increased pressure on margins, coming from modern large scale and highly productive manufacturing...
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