The global oleochemicals market size was valued at USD 23.50 billion in 2022. It is estimated to reach USD 53.32 billion by 2031, growing at a CAGR of 7.2% during the forecast period (2023–2031).
Oleochemicals are organic compounds derived from tropical and animal oil, such as soybean, sunflower, palm, tallow, lard, and fish. Oleochemicals include forming essential oleochemical substances like fatty acids, fatty alcohols, glycerine, methyl esters, and others. Intermediate chemical substances produced from the crucial oleochemical substances include alcohol ethoxylates, alcohol sulfates, alcohol ether sulfates, quaternary ammonium salts, monoacylglycerols, diacylglycerols, structured triacylglycerols, sugar esters, and other oleochemical products.
Chemical procedures like water-based hydrolysis, alcohol-based alcoholysis, and hydrogenation are a few of the processes used to produce oleochemicals. Oleochemicals can be used as an alternative to petrochemicals derived from petroleum. Oleochemicals display low toxicity, biodegradability, and eco-friendliness, and these chemicals are rapidly replacing traditional petrochemicals. The major oleochemicals are fatty acids, fatty alcohols, methyl esters, and glycerine, which are basic oleochemicals. These are utilized in food, medicines, nutraceuticals, elastomer, personal care and cosmetics, grease and metalworking, lubricants, coatings, sealants, and elastomer.
The global production of oils and fats has grown significantly in recent years. These resources are widely available or can be easily cultivated (virgin vegetable oils) or cheaply sourced (waste vegetable oils and animal fat) in virtually all parts of the world. Ecological and economic advantages are driving the popularity of oleochemicals in the manufacturing of industrial chemicals. This is responsible for the research interest in oleochemicals as one of the most cost-effective and widely available substitutes for a variety of industrial chemicals, including petrochemicals.
Basic oleochemicals include fatty acids, methyl esters, fatty alcohols of these fatty acids, glycerol, and fatty amines. With a better understanding and investment in research, companies can use vegetable oils to manufacture different valuable products. The use of tropical and non-edible oils in the production process instead of refined vegetable oil has significantly improved the cost of oleochemical processes. The conversion of waste materials into industrial fuels and chemicals also substantially reduces the environmental impact of the production process, thereby driving the market’s growth.
The demand for oleochemicals in consumer markets such as FMCG, pulp and paper, and paints and coatings has increased as government regulations have become stricter and favored the environment and biodegradable chemicals. The application of oleochemicals in soaps has increased as consumer awareness of safer products that are healthier for the skin is growing. Consumers now do not prefer synthetic chemicals as they have realized their side effects.
Additionally, as crude oil prices and petrochemicals have increased recently, manufacturers have switched to oleochemicals because plant-based lauric oils processed from palm kernel were cheaper. Fatty acids used in personal care and cosmetics products are a mixture of glycerides of saturated and unsaturated fatty acids. Lipids used in cosmetics are derived from oilseed. This has fueled the growth in oilseed plantations and the adoption of oilseed chemicals in multiple industries, driving the market’s growth.
Government regulations in the oleochemicals industry have both positive and negative impacts. They have encouraged manufacturers to produce oleochemicals. However, despite the widespread use of oleochemicals, legal restrictions on their usage and possible side effects on human health will result in a market downturn. Contamination in animal fats and oils is one of the main reasons for regulations in the industry, which arose as a response to the prevention of infectious diseases. In addition, animal illnesses appeared transmissible to humans, where they could develop into various complications. Contamination of animal feed can be associated with food consumed by animals and pathogens, which can be transmitted through the food chain to humans and cause foodborne illness, thereby hampering the market growth.
The increasing demand for greener, more cost-effective products, minimal processing, cheaper feedstock, and new product avenues are driving the commercialization of green chemicals. Growing consumer awareness of renewable oleochemicals and increasing environmental concerns drive the market. According to current trends, the cost hikes in petrochemicals spurred the growth of green chemicals. Green chemicals include chemicals produced from bio-based feedstocks. The market for green chemistry is about to outpace the general chemical market during the forecast period.
In addition, companies are reducing their use of hazardous substances, creating safer products, and lowering the impact of products on human health and the environment. The US Environmental Protection Agency (EPA) continues to facilitate the adoption of this practice across industries, which will cause significant environmental benefits, innovation, and a strengthened economy. Rising crude oil costs and stricter environmental controls incentivize manufacturers to use green chemicals to counterbalance the capital investment required to change current equipment and install new facilities. Such factors are anticipated to create lucrative market opportunities.
The global oleochemicals market is bifurcated into type, raw material, and application.
Based on type, the global oleochemicals market is bifurcated into fatty acids, fatty alcohols, glycerine, methyl ester, and others.
The fatty acids segment dominates the global market and is projected to grow at a CAGR of 5.96% over the forecast period. Fatty acids are the chemicals in oleochemicals produced from the hydrolysis process of oils and fats. Fatty acids are the raw materials that are used in the production of glycerides and plasticizers. Natural fatty acids are derived from oils and fats such as palm, sunflower, soybean, and castor oils. In addition, natural fatty acids are widely used in consumer sectors such as personal care and cosmetics, home care, and soaps and detergents. Consumers prefer sulfate-free and mild chemicals in personal care products; this has fuelled the growth of natural fatty acids that are sulfate-free and mild. Increasing demand in consumer markets is driving the development of the fatty acids market. Fatty acids are used in producing soaps and detergents; increasing usage of fatty acids derived from fats and oils is substituting petrochemicals in soaps and detergents.
Fatty alcohols are widely used in shampoos, shaving creams, and laundry detergents. In personal care and cosmetics products, fatty alcohols are used as emollients. Fatty alcohols are also used in metalworking lubricants and fire retardants. High operating costs are associated with producing fatty alcohols because of the consumption of metallic sodium and the equipment needed to recover both the solvent and reducing alcohol. There are various ways to derive fatty alcohol, but the one widely used is when metallic sodium is mixed with a solvent such as xylene and a triglyceride oil. The solvent and fatty alcohol are recovered by distillation for re-use, and the by-product alcohol is generally fractionated.
Based on raw material, the global oleochemicals market is divided into animal oil and tropical oils.
The tropical oil segment is the most significant contributor to the market and is anticipated to exhibit a CAGR of 5.81% over the forecast period. Tropical oils are derived from tropical plants, readily available in the tropical region. Tropical oils are derived from palm oil, coconut oil, sunflower oil, and others. Tropical oils are saturated fats used in manufacturing soaps, detergents, personal care, and cosmetics. In addition, crude oil prices have increased significantly due to supply chain disruption, which has fueled the growth of oleochemicals derived from tropical oils. Oleochemicals derived from tropical oils are essential raw materials for the chemical industry. Tropical oils are biodegradable and environment-friendly, which has been the preference of many consumers worldwide.
Animal fats and oils are derived from animals and are water-insoluble and hydrophobic substances. Fatty acids derived from animal oils and fats vary in physical properties. Animal fats and oils are tissue fats that can be derived from various animals. They are by-products of the meat packaging industry or manufacturing of meat products. Animal oils are present in abundance and are an economical source of manufacturing. Tallow oil is the most used animal oil. It is derived from tissues by melting waste animals. The raw materials are heated and separated to remove moisture from the tissue.
Based on application, the global oleochemicals market is bifurcated into pharmaceuticals, personal care and cosmetics, food and beverage, soaps and detergents, and others.
The soaps and detergents segment owns the highest market share and is predicted to grow at a CAGR of 5.82% over the forecast period. Soaps can be divided into bath soaps, body washing soaps, and clothing washing soaps. Others are liquid soaps for hand washing and industrial use. Oleochemicals in detergents are used to produce more lather and boost cleansing properties. With the increasing concerns over the environment-friendliness of oleochemicals, manufacturers are promoting the adoption of oleochemicals across all detergents, i.e., liquid and powder. There have been concerns about synthetic detergents, which have forced governments to make regulations stricter against synthetic detergents. The more stringent laws for synthetic chemicals and the side effects of synthetic chemicals on the environment have forced manufacturers to adopt naturally sourced oleochemicals.
The pharmaceutical industry prefers natural products over synthetic additives. The sector manufactures drugs such as tablets, capsules, syrups, ointments, gels, creams, and vaccines. A dosage form contains both API and oleochemical excipients. Pharmaceutical excipients are of various origins: animals (e.g., lactose, gelatin, stearic acid, beeswax, honey musk, lanoline) and plants (e.g., starches, sugars, cellulose, alginate). Oleochemical excipients should have a good safety and quality profile for drug formulations. Plant and animal-derived compounds have some added advantages compared to synthetic polymers, i.e., they are biodegradable, environment-friendly, and readily available.
Based on region, the global oleochemicals market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.
Asia-Pacific is the most substantial global oleochemicals market shareholder and is expected to grow at a CAGR of 5.89% over the forecast period. Asia-Pacific is a significant producer and consumer of oleochemicals in products such as personal care and cosmetics, pharmaceuticals, and soaps and detergents. Asia-Pacific will account for most production and world consumption in the forecast period. Malaysia and Indonesia are significant producers of oleochemicals derived from palm oils, such as fatty acids and alcohol. They have attracted investments from almost all major global companies, such as Emery Oleochemicals, Wilmar, and BASF. This scenario has dramatically changed in recent years. Just over two decades ago, all oleochemicals and derivates were produced in developed countries like the US and European nations. Currently, most manufacturing plants are in Asia-Pacific, and new capacities are also being added in this region. Extensive offshoring of manufacturing operations to Asia-Pacific countries from Europe and North America is attributed to cheap labor and availability.
Europe is anticipated to exhibit a CAGR of 5.49% over the forecast period. Europe is the second-largest oleochemical market due to strict regulations from the EU against using synthetic chemicals in personal care and cosmetics, and food and beverage. Oleochemicals in Europe are primarily used in food and beverage. In addition, many personal care and cosmetics vendors use oleochemicals for safety and better nourishing properties. The European Union has repositioned its policies and limited the usage of hydrogenated fats and their by-products due to several heart risks associated with hydrogenated fats. Restricting the use of hydrogenated fats will fuel the market growth of oleochemicals as many manufacturers will substitute hydrogenated fats with oleochemicals. Furthermore, Germany is leading the market growth of oleochemicals in the European market due to imported feedstocks but later developed by German manufacturers such as BASF and Emery Oleochemicals. The use of oleochemicals derived from coconut oil has grown in European countries due to health attributes and lack of trans-fatty acids, making it ideal for usage in consumer products and driving regional market growth.
North America has been a traditional market for oleochemicals. North America also has a large population of lactose-intolerant people. This large number of people are driving the trend for health consciousness and habit for healthy eating among individuals. The growing demand for bio-based eco-friendly products drives the growth of oleochemicals in multiple applications. Fluctuations in crude oil prices have forced manufacturers to adopt oleochemicals in applications such as pharmaceuticals, soaps, and detergents. In addition, the US dominates the North American region due to the increasing use of oleochemicals in soaps and detergents due to regulatory guidelines from the FDA. The US has sufficient availability of soybean oil, which has given the US a competitive advantage over other countries. Although it produces oleochemicals from soybean oil, most oleochemicals are imported from Asia-Pacific countries. The growing use of oleochemicals and regulations by the FDA have amplified the growth of oleochemicals in the North American region.
The major driving factor responsible for the growth of the Latin American market is an increase in disposable incomes and consumer inclination toward biodegradable products and sustainable solutions. Furthermore, government regulations for using eco-friendly products and substituting petrochemicals with oleochemicals have fueled market growth.
The oleochemicals market in the Middle East and Africa is expected to thrive in the forecast period. The Middle East and Africa depend on petrochemicals as crude oil is abundant in the region. As laws got stricter and the governments of the UAE and Saudi Arabia shifted their focus on natural and environment-friendly products, manufacturers have been encouraged to adopt oleochemicals across applications because of their biodegradable properties.
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