Table of Contents
Use this report to:
- Analyze how the composition of various fats and oils transform into the range, quality and types of acids produced and the applications for which those acids can be used.
- Explore the various attributes of different acid types and how these types compete with synthetic formed products from the petrochemical route and the major applications outlets.
- Outline the impact of green credentials on the environmental profile of the chemical-using industry.
- Study the developments and research that demonstrate the green credentials of the oleochemical family.
- The global market for natural fatty acids should reach $16.2 billion by 2021 from $12.4 billion in 2016 at a compound annual growth rate (CAGR) of 5.6%, from 2016 to 2021.
- The derivatives market should reach $8.5 billion by 2021 from $6.2 billion in 2016 at a CAGR of 6.8%, from 2016 to 2021.
- The personal care, cleaning products, polymerization, and vulcanization market should reach $6.2 billion by 2021 from $5.0 million in 2016 at a CAGR of 4.7%, from 2016 to 2021.
STUDY GOALS AND OBJECTIVES
This BCC Research study is focused on the natural-based fatty acid industry, which is part of the wider oleochemical industry. Even though natural-based fatty acid has been a workhorse in the chemical industry for many years, it is a brightly burning star today, fueled by the green chemistry agenda. This is because the raw material consumed to produce the oleochemicals is mainly based on material that is renewable, sustainable and readily biodegradable.
This study reviews how the industry has recovered since the economic slowdown of 2008 and 2009 and how it will develop and change over the next five years through 2021. The analysis looks at the basic oleochemical business of fatty acids derived from fats and oils, and touches upon the impact of the biodiesel industry on the market. It presents historical demand data for 2015, estimates for 2016 and projections for 2021. The report also reviews the main markets for the major acid types from stearic acid, distilled fatty acids, polyunsaturated (including tall oil fatty acid: TOFA), fractionated fatty acids and monounsaturated oleic acid. In addition, the analysis
Highlights market sectors; reviews latest technology developments, including the patent space; provides a regional perspective; examines the changing landscape of raw material and reviews the byproduct glycerin market.
Market shares provided by leading and active merchant players are profiled. The report looks at how government incentives and regulations have impacted the industry, especially with respect to self-sufficient energy resources and animal fat classification. It also assesses the impact of rising raw material prices, tight supply and demand curves for certain acid chains, the uncertainty of the economy in many of the developed countries around the world, and the impact of the Roundtable on Sustainable Palm Oil (RSPO) accreditation.
REASONS FOR DOING THE STUDY
The fatty acid industry provides multiple products that are used in a wide range of industries due to the functionality they offer as a result of their molecule structure. A typical fatty acid has two reactive sites; the minor is the double bonds situated along the straight alkyl chain, while the major is a carboxylic acid group at the start of the chain. Thus, the molecule is a starting material for a number of reactions changing the functionality and performance dependent on the fatty acid derivative formed.
Fatty acids are excellent hydrophobes, a key material for a number of very important surfactant groups. Oleochemicals will be a vital resource to meet the ingredient needs of a number of specialty chemical formulators and consumer-facing companies. Oleochemicals service different types of markets. More industrial-oriented segments require ingredients that can achieve or even surpass the performance specification of the application at a price that is affordable, while the more wellbeing- and health-oriented markets require ingredients that are not only suitable for human contact, be that externally on the skin or internally such as orally digested, but are also sourced from renewable and natural-grown origins. In both cases, ingredients consumed must meet all safety, health and environmental regulations and legalization. There are a number of governmental tax break incentives for using biomass to generate energy and produce fuel products.
There are also export tax incentives for major tropical oil plantation countries to use local companies to develop downstream manufacturing capabilities utilizing locally sourced materials. Combined, these incentives will have a profound effect on the industry at various points along the value chain. The self-sufficient energy incentives will not only drive up the cost of raw material for producers, but will also tighten the supply, particularly for tallow-based economies. The export taxes will not only make it prohibitive for foreign companies—particularly those located outside Asia-Pacific—to source the high in-demand, medium-chain, fatty acid raw material, but will also mean that local producers gain an unfair monetary advantage over the competition. This is because derivatives of these fatty acids or refined acids, such as fractionated and distilled cuts, are exempt from this export tax.
The exponential growth in certain segments of the oleochemical family led to the devastation of important ecological systems that cannot be recovered. In addition, it resulted in the diversion of not only vital food ingredients, but also the arable land used to grow the crops—such was the eagerness of a number of companies to benefit from the high-value demand. The industry is now going to great lengths to not only meet the growing needs of the market, but to do this in a way that is sustainable while minimizing the impact of the food supply chain.
CONTRIBUTION OF THE STUDY AND INTENDED AUDIENCE
Some 25 years ago the oleochemical industry was in the heartland of mainland Europe and North America, with a small foothold in Asia-Pacific. Today, the main industry has shifted toward Asia-Pacific, with over 65% of overall capacity. Another revolution has taken place today with upstream plantation owners seeking routes and applications for their crops by taking over established and longtime oleochemical firms or moving products globally for the same price, regardless of destination.
While a global business, fatty acids have a high regional tendency due to the fact that transporting fatty acids a long distance is expensive as acids are prone to air oxidation, color reversion, odor reversion, metal pick-up and partial crystallization. Factors that play a role in the selection of raw material used in oleochemical production include availability, fatty acid composition, quality and price. A number of sources are interchangeable, such as coconut oil or palm kernel oil or palm oil for tallow, but it can result in challenges around meeting certain specifications as it is not a direct like-for-like substitution.
An important part of the profitability of the fatty acid industry is the outlets for the byproduct glycerin that is automatically generated when either fats or oils are hydrolyzed. The amount generated varies depending on the starting material, with the harder oils generating more glycerin than the majority of animal fats or softer oils. In recent years, the glycerin market has been flooded by supply from the biodiesel market, causing a collapse in prices, which has greatly impacted the profitability of fatty acid operators. The oversupply has encouraged efforts to develop new markets for this byproduct.
To this end, the study will be useful for the following audiences:
- Marketing managers.
- Senior oleochemical executives.
- Decision-makers from international governments.
- Traders and distributors of chemical products.
- Plant and operations directors.
- Engineering and technology manufacturers and providers.
- Process and technology support advisors.
- Plantation owners and renders managers.
- Logistical, supply chain and e-business specialists.
- Corporate, project and trade finance specialists
- Strategic planners and forecasters.
- New product and business developers.
- Decision-makers from the chemical and energy industries/end users (oil, gas, petrochemical, fertilizer and chemical companies).
- Trade associations.
- Environmental consultants.
- Equipment manufacturers and process designers.
- Venture capitalists, those involved in research and development (R&D) work and academic institutions.
SCOPE AND FORMAT
As the populations of developing nations gain a higher standard of living, these communities will demand more premium and Westernized products. Oleochemicals, such as fatty acids, will be a vital link in the supply chain as their outstanding functionality and versatility make them ideal to be used in a multitude of applications. In addition, the high reactivity of this acid enables the production of a range of derivatives that can be tailored to meet the needs of a number of end-user industries, which use the formulations to produce the ideal blend of functionality and performance.
The range of derivatives is dependent on the reaction site used. Derivatives can be produced using the acid functionality, such as saponification, esterification, ethoxylation or amination, while derivatives based on the unsaturation include isomerization, dimerization, epoxidation and hydrogenation acids. Fatty acids and their derivatives have a range of functionality that can be used to support the move away from the petrochemical-based platform that is reliant on the rapidly reducing fossil fuel industry since all the easy oil has been extracted and the remaining oil is more inaccessible, more remote and located in more inhospitable environments.
While the equivalent renewable biorefinery-type platform has a long way to go to be commercially viable and suitable to replace the petrochemical platform, oleochemicals will be a major contributor to such development. For example, ester derivatives have the functionality of being surfactant as well as possess lubricity and solvency, which deliver the following benefits:
- The ability to reduce the surface tension between a polar and an apolar medium, which is important for cleaning and emulsification.
- The ability to reduce friction, which is needed for lubricant applications.
- The ability to dissolve chemicals, which is key to providing a greener solvent substitution for cleaning.
This report provides an understanding of how the composition of various fats and oils transform into the range, quality and types of acids produced and the applications for which those acids can be used. It explores the various attributes of different acid types and how these cuts compete with synthetic formed products from the petrochemical route and the major applications outlets.
This study will reveal the developments and research that demonstrate the green credentials of the oleochemical family and how these credentials are changing the environmental profile of the chemical-using industry. This is helpful to the transformation from that of a major polluter to an industry working in harmony with its environment to meet the needs of the current generation without detrimental effects on its surroundings that would impact the generations to come.
The study is divided into a number of sections and covers the following fatty acid types:
- Stearic acid.
- Distilled fatty acids.
- Fractionated fatty acids.
- Polyunsaturated acids, including tall oil fatty acids.
- Oleic acids.
The fatty acid oleochemical business is important for the following reasons:
- It is a major source of surfactants, which are starting materials for the detergent, cleaning and personal care industries.
- The functionality and performance combination enables formulators to deliver tailored solutions to meet a variety of customers’ needs.
- It is an important cornerstone in the development of a sustainable chemical platform to reduce the reliance on fossil fuel-based chemistry.
- It promotes the development of green chemistry that is environmentally friendly.
- Conversion of solid fats and liquid vegetable oils into a straight chain saturated or unsaturated carboxylic acid can be used in edible and nonedible markets.
METHODOLOGY AND INFORMATION SOURCES
The insights and analysis contained within this report are based on information gathered from a cross section of oleochemical manufacturers, end users and other informed sources. Primary interview data were combined with secondary information gathered through an extensive review of published literature, such as trade magazines, trade associations, company literature, conference material, patented technology, social media sites and online databases to produce the baseline market estimates contained in this report and building on the data collected in the previous review. With 2015 as the baseline, changes within each application were discussed and projections for each segment were developed for 2016 through 2021. Key findings were summarized, as well as tested, confirmed and debated with important contacts in the industry. BCC Research understands the market drivers and their impact from a historical and analytical perspective, which enabled the extraction and discussion of major developments and the subsequent impact on the markets.
The analytical methodologies used to generate market estimates are based on a projection of world economy, world trade and technology developments. All dollar projections presented in this report are based on 2015 constant dollars.
This updated report is based on an earlier (2013) report by Ronald van Rossum and John Joe Harkin. Mr. Harkin is a Ph.D. chemist who graduated from the University of Manchester (U.K.), and is an independent business intelligence consultant. He has 21 years of experience providing business insight to a range of companies in the chemical and related industries. The majority of his industrial career was spent supporting business development activities on a global basis for the market-leading oleochemical firm at that time. He is also the co-author of BCC Reports CHM039B Oilfield Process Chemicals: Global Markets and CHMO46B Global Market for Catalyst Regeneration.
The analyst responsible for updating the report is Andrew McWilliams, a partner in the Boston-based international technology and marketing consulting firm, 43rd Parallel LLC. Mr. McWilliams is the author or co-author of numerous other BCC studies, including the previously updated version of this report and studies in related fields, such as ENV011A The U.S. Market for Clean Technologies, CHM020E Catalysts for Environmental and Energy Applications, CHM039D Oilfield Process Chemicals: Global Markets, and EGY051A Petroleum Fuel Optimization Technologies.
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