by Douglas Root* (Advanced Biofuels USA) The oleochemicals industry is struggling. Shipping costs have increased. Suppliers are not able to deliver raw materials, maintenance supplies, and new equipment. Scheduled maintenance activities have lapsed and restarting equipment is not happening smoothly. The workforce is short-handed and training is out-of-date. Co-products and waste materials are not readily sold or disposed.
Like most manufacturing industries, oleochemicals producers are finding that returning from a prolonged shutdown is not a simple task.
Fortunately, there is a small army of trained and experienced professionals in the industry working diligently to overcome all of the operational challenges.
Additionally, there are many hungry consulting firms with great experience hoping to assist in meeting the challenges of returning to profitable operation in the post-pandemic global economy.
Many such consulting firms were presenters at the 13th World Oleochemicals Conference on June 23 & 24.
Eight short presentations on the challenges of excessive volatility and panel discussions and Q&A sessions filled this conference with resources to address most of the big issues in the oleochemicals world.
However, none of the presentations presented a solution to the greatest challenge, namely, the elevated price of soybean oil and palm kernel oil. The current prices for these commodities are reflective of the production disruption in the vegetable oil industry and no one can accurately predict when prices might return to the pre-pandemic levels. In contrast, shipping costs are up to five times higher than they were in mid-2019, but most knowledgeable folks expect these costs to return to ‘normal’ within the next twelve months.
Many oleochemicals are being sold at a premium price compared to the petrochemical alternatives and buyers of oleochemicals are increasingly sensitive to the value of meeting consumer expectations for ‘green products’ produced without petrochemicals. This is particularly important for personal care products and soaps and detergents for home cleaning. However, even at premium prices, a reliable supply and timely delivery of oleochemicals to customers is not assured due to the challenges listed at the outset of this report. Some of the resources needed to overcome these challenges can be found at https://www.icis.com/explore/
While the optimists expect that we will shortly see a return to ‘normalcy’, the pessimists are asking whether that will be soon enough and whether there will be lasting damages to a vibrant industry. Experts and industry insiders are being cautiously silent on expectations for the next twelve to eighteen months.
*Dr. Douglas Root has provided technical insight to renewable energy projects for over two decades with a primary focus on agricultural feedstocks. He is currently working on pilot scale processes for increased value from agricultural co-products. Doug Root has served as a board member for Advanced Biofuels USA since its inception and now serves as its president.