Where is the silver lining with looming overcapacity?

“Commissioner of PT Unilever Oleochemical Indonesia SancoyoAntarikso said it allocated a capital expenditure totaling Rp1.45 trillion for the purchase of land and construction of oleochemical plant.”                                                                                  

24/6/13, www.idnfinancials.com

Indonesia accelerates investment in CPO production capacity. By next year, the country is to spend a minimum of USD2.7billion building crude palm oil processing facilities. Twenty local and foreign processors, including Sinar Mas Group, Musim Mas Group and PermataHijau Group are all developing oleochemical and oleofood plants.

The new facilities is expected to  boost Indonesia’s processing capacity to almost 40 million tons a year by next year, which will comprise 30.9 million tons for refining and fractionation capacity, 4.22 million tons for oleochemical production capacity and 4.34 million tons for biodiesel manufacturing capacity.

According to Frost & Sullivan, there is sufficient fatty alcohol capacity to last the market for at least 3 years. The future expansions would lead to both excess capacity and supply.

Asia’s   fatty alcohols capacity is projected to grow by more than 30%, with 5 projects to start up in SE Asia in 2013, increasing the fatty alcohol capacity by more than 500,000 ton by end of 2013 versus current capacity at 1.5 m ton/yr.How will this change the demand/supply dynamics if all these new capacities come on-stream as planned? How are players reacting to the challenge and will margin be further squeeze?

Majority of the Oleochemicals go into home & personal care applications, will the demand for HPC pick up further to absorb the new capacities? What are the other emerging applications and growth outlook? How would the renewable surfactants growth impact on oleo market?

Where is the biodiesel industry heading? What will be the impact of biodiesel industry on the oleochemicals industry?

Find out more at CMT’s Oleochemicals Outlook conference on 22-23 August 2013 in Jakarta. This event will gather leading industry panel to discuss burning issues surrounding the industry.

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