Imports of fatty acids needed to supply oleochemical players

by Dennis D. Estopace, BusinessMirror

Posted at May 31 2013 08:17 AM | Updated as of May 31 2013 04:17 PM

MANILA -- The Philippines, a longtime exporter of coconut products, may now need to import fatty acids to produce oleochemicals, as the facilities of a major manufacturer of such products remain closed.

“We may need to do that [import fatty acids]—[albeit only] a small amount—maybe from Malaysia or Indonesia,” Evelina L. Patiño, executive vice president of United Coconut Chemicals Inc. (Cocochem), told reporters recently.

According to her, the Philippines may need to import as much as a hundred tons of palm kernel monthly to supply some manufacturers that use oleochemicals.

Most of these manufacturers are into soapmaking and rely on local oleochemical suppliers like Cocochem. However, the 32-year-old company remains shuttered after a fire hit its 42-hectare site in Bauan town, Batangas province, two years ago.

In its heyday, Cocochem can produce 36,000 metric tons of fatty alcohol and 18,800 MT of fatty acids, among others.

Patiño said global fatty-acid capacity is estimated at 9 million MT, while growth in demand is estimated at 4 percent.

Malaysia and Indonesia collectively supply 42 percent of fatty acids in the market; the Philippines, much less than that.

“Indonesian and Malaysian oleochemical plants are integrated upstream [with] palm plantations,” the Cocochem official said, adding that the growth of the two countries could be credited to the encouragement of domestic production through an export tax scheme, which makes domestic prices of oils cheaper in those nations.

She also said the company needs about $15 million to restart its production of fatty acids and fatty alcohol. These are used to produce detergents, personal-care items and cosmetics, among others.

Patiño said global fatty-alcohol capacity is estimated at 3.7 million, with growth in demand estimated at 2.5 percent. She added that Malaysia and Indonesia supply 25 percent of fatty alcohol in the market, while the Philippines supplies less than 5 percent.

Like Patiño, Dean Lao Jr. of the Philippine Oleochemical Manufacturers Association said the Philippines should also focus on coconut-oil by-products, especially glycerin.

This chemical, Lao said in his presentation to scientists on Tuesday, has a global market demand of about 37,500 tons annually.

“The question here is what can the Philippines do about this,” he added.

Patiño said a major challenge remains in this regard, since only Pilipinas Kao and PIDI are the only operational oleochemical plants in the country.