Fatty acids: Cycles

Why lauric acids lurch while stearic stays calmer

What this tab covers How its prices and margins move: past booms and busts with price levels, the spread or margin that the industry watches, the drivers of the cycle and the metrics to track.

Fatty acid prices follow palm, palm kernel and coconut oil with a processing margin. Margins widen when demand recovers and narrow when new South-East Asian capacity arrives, which happens in waves. Lauric oils swing more than palm oil, so lauric acids are more volatile than stearic. Policy shocks such as Indonesian export levies, biodiesel mandates that pull palm oil into fuel, and US tariffs shift trade and margins.

The spread to watch Fatty acid price minus feedstock oil

Computed as distilled fatty acid price less about 1.05-1.1 t of the relevant oil plus a glycerine credit of about 0.1 t (indicative). Public spread data are not published; listed producers' oleochemical segment margins (KLK, IOI) are the best proxy.

Booms and busts

2011-2015
Indonesia set crude palm oil export taxes much higher than oleochemical export taxes (CPO 22.5% in Aug 2011, oleochemicals tax-free), triggering an Indonesian capacity boom and squeezing Malaysian and European margins.
not retrieved (MPOB Palm News, 2011)
2021-2022
The vegetable oil spike after Covid, Indonesia's export ban and the war in Ukraine lifted all fatty acid prices (palm_oil tile).
not retrieved
2023
Fatty acid demand weakened after destocking (GlobalData).
not retrieved
2024-2026
Demand rebounded in 2024 while seven new plants came on; US reciprocal tariffs (2025) and lauric oil shortages raised costs (GlobalData).
Indonesian HS 382319 exports averaged about $900/t and stearic about $1,000/t in 2024 (derived, UN Comtrade)

What drives the cycle

Palm and lauric oil prices. Oil is 80-90% of cost; weather, ageing palm trees and biodiesel mandates move it.
Capacity waves in Indonesia and China. About 4 Mt of new capacity to 2027 will pressure margins.
Export levies and tariffs. Indonesian levy structures and US tariffs change who can export profitably.
End-use demand. Tyres, soaps and personal care follow GDP and consumer spending.

Metrics to track

Metric	Why it matters	Where to track it
Crude palm oil and palm kernel oil futures	feedstock cost	Bursa Malaysia
MPOB monthly stocks and exports of oleochemicals	Malaysian supply	MPOB
Oleochemical segment results	margin proxy	KLK, IOI, Wilmar quarterly reports