Fatty Acid Market - Forecast (2022 - 2027)

During the global pandemic, Covid-19, the demand for fatty acids decreased due to various economic restrictions and regulations. And due to these strict lockdown measures, many fatty acid units had to stop their production process, which restricted the fatty acid market growth in 2020. In addition, due to the outbreak, the production and export of edible oils decreased, owing to which the demand for fatty acid also decreased, causing a significant decline in the fatty acid market revenue. Furthermore, because of the covid-19 epidemic, the production, consumption, imports, and exports of Fatty Acid were also hindered. These multiple consequences of the covid-19 pandemic stretched the troubles for the Fatty Acid market in 2020. However, the demand for Fatty Acid is set to improve by the year-end of 2021, owing to the boosting personal and home care sectors.

 

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The report: “Fatty Acid Market – Forecast (2021-2026)”, by IndustryARC, covers an in-depth analysis of the following segments of the Fatty Acid Industry.

 
By Type: Unsaturated fatty acid and Saturated fatty acid

By Length of Chain: Short-chain fatty acids (SCFA), Medium-chain fatty acids (MCFA), Long-chain fatty acids (LCFA), and Very long chain fatty acids (VLCFA)
By Application: Personal Care and Cosmetics, Home and Industrial Cleaning, Textiles, Agrochemicals, Pharmaceuticals, Rubber, Plastics, Paper and Paper Products, Paints and Varnishes, and Others
By Geography: North America (USA, Canada, and Mexico), Europe (UK, Germany, France, Italy, Netherlands, Spain, Denmark, Belgium, and Rest of Europe), Asia-Pacific (China, Japan, India, South Korea, Australia and New Zealand, Taiwan, Malaysia and Rest of APAC), South America (Brazil, Argentina, Colombia, Chile, and Rest of South America), Rest of the World (Middle East, and Africa).

Key Takeaways

The Asia Pacific dominates the Fatty Acid market, owing to the increasing home care cleaning and industrial cleaning sector in the Asia Pacific region. The increasing per capita income and evolving lifestyle of individuals coupled with the rising population are the major factors expanding the fatty acid market in the region.

Government regulations promoting the use of eco-friendly products among various end-use industries such as agrochemicals, personal care, and plastics are supporting the market growth for fatty acids.
The increasing usage of plastics and rubber products globally is also one of the major factors driving the fatty acids market between 2021-2026.

 

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Figure: Fatty Acid Market Revenue Share by Region, 2020 (%)

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The unsaturated segment held the largest share in the Fatty Acid market in 2020 up to 72% by revenue and is estimated to grow at a CAGR of 5.2% during 2021-2026. Unsaturated fatty acids have one or more carbon-carbon double bonds in their composition. Unsaturated fatty acid plays an important role in the synthesis of Polyunsaturated fatty acids (PUFAs). Unsaturated fats are generally extracted from avocado, nuts, and soybean, canola, and olive oil among others. Unsaturated fatty acids are also preferred as an important component in diet and they help to reduce the risk of heart disease and lower cholesterol levels. These are some of the major factors supporting the market growth for the unsaturated fatty acids segment during the forecast period. The saturated fatty acid segment is expected to grow at a high CAGR of 6.2% in the global fatty acid market.

 
Fatty Acid Market Segment Analysis – By Application

The home and industrial cleaning segment occupied the largest share in the Fatty Acid market in 2020 up to 48% by revenue and is estimated to grow at a CAGR of 5.4% during 2021-2026. Fatty acids are widely used as an anti-foaming agent in the household and industrial cleaning market. Thus, growing awareness about the importance of hygiene has led to robust growth in demand for household and industrial products which is also growing the consumption of fatty acids during the forecast period. Additionally, fatty acids and oils are used for industrial floor cleaners and floor polishes because of their wetting, emulsifying and cleansing properties which also acts as a driving factor for the fatty acid market growth. According to the article published by Entrepreneur India, the Soap Industry in India is comprised of about 700 companies and generates revenue of around $17 billion US dollars each year. This will further increase the demand for fatty acids in the Indian market. The pharmaceutical segment is expected to register a high CAGR of 6.2% in the application segment.

 
Fatty Acid Market Segment Analysis – By Geography

 
The Asia Pacific held the largest share in the Fatty Acid market in 2020 up to 59% by revenue, owing to the flourishing home care and pharmaceutical industry in the region. The presence of developing nations such as China, India, and others is supporting the regional growth. The presence of a large population along with the growing usage of cleaning products such as soaps and detergents is one of the key drivers driving the market growth for fatty acids in the Asia Pacific region. According to the Article published by IndianMirror, soap manufacturing is one of the major activities in the Indian FMCG industry and accounted for more than 50% of the consumer goods sector. They also mention about 50% of soaps produced in India are sold in the rural market. As per 2019-2020 data, approximately 5 million retail outlets sell soaps of which 3.5 million shops are in the rural area. Furthermore, the growing personal care and cosmetics sector in the Asia Pacific region is increasing the consumption of fatty acids during the forecast period. According to the facts published by the Ministry of Economy and Industry, the Indian beauty and personal care (BPC) industry is estimated to reach USD 9.5-10.5 billion by 2021.

 
Fatty Acid Market Drivers

Omega-3 fats are polyunsaturated fats. Majorly Omega 3 fats are available in 3 types namely Eicosapentaenoic acid (EPA), docosahexaenoic acid (DHA), and Alpha-linolenic acid (ALA). Omega-3 fatty acids have a carbon-carbon double bond and it is available in certain foods such as flaxseed and fish, as well as dietary supplements such as fish oil. The rising penetration of omega-3 in the active pharmaceutical ingredient (API) is supporting its growth during the forecast period. According to National Health and Nutrition Examination Survey (NHANES), most children and adults in the United States consume recommended amounts of omega-3s as ALA. Omega-3 fatty acids help to reduce the risk of cardiovascular disease, sudden cardiac death caused by an abnormal heart rhythm, and also reduce the risk of blood clots. They are types of fats generally found in vegetable oils, such as corn, safflower, and soybean oils among others. They are also used for reducing the risk of heart disease, lowering total cholesterol levels, lowering bad cholesterol levels, and reducing cancer risk among others. In August 2019, Cargill has received approval from the US Department of Agriculture (USDA), for the development of omega-3 Canoal in the United States.

Fatty acid salts are a widely used class of anionic surfactants in-home care cleaning industry. They are used in different household cleaning products such as soaps, detergents, bleaches, and cleaners among others. lauric, myristic, palmitic, stearic, ricinoleic, oleic, linoleic and linolenic acids and are some of the types of fatty acids used in soap and detergent products. Approximately 70–85% natural herbal soap bars are composed of sodium salts of fatty acids which are derived from triglycerides or hydrolyzed fatty acids. These fatty acids play key roles in the performance of the natural soap and reduce the cost of the finished products. Due to the covid-19 pandemic, the usage of household cleaning products increased rapidly globally to be safe from viruses. During the pandemic period, it was observed that the frequency of cleaning (69.3%) and the amount of cleaning product usage (74.2%) increased significantly globally. According to International Association for Soaps, Detergents and Maintenance Products (A.I.S.E), the total market value of the household care and professional cleaning and hygiene sector in Europe was estimated at US$ 47.1 billion in 2020. They also stated that in 2020, consumers in Europe spent an estimated US$ 37 billion on household care products.

Raw materials are the most important component of the fatty acid industry. Hence, commodity prices are an important element in determining market strategy. In recent times there has been an increase in the prices of raw materials that are used for fatty acid manufacturing such as tall oil, soya, coconut, and palm kernel others, owing to which there is a fluctuation in the pricing of fatty acid as well. Fatty Acids are produced from natural fats and oils by hydrolytic or lipolytic splitting according to Tejimandi an advisory firm. Most of the agri-oils are in the inflationary trend. Palm oil and Palm Fatty Acid Distillate (PFAD) prices continued to rise. They are now up 43-55% on a YoY basis. Copra and coconut oil saw a 2- 5% MoM rise while groundnut oil was up 3% MoM. According to LMC International, raw materials occupy 80% of the total cost of production. Thus, the cost of raw materials is continuously increasing or fluctuating because of factors such as transportation & logistics, increasing demand, and more, which is affecting the price of fatty acids. Thus, the volatility and increase in prices of raw materials such as oils and fats are expected to create a significant challenge for the fatty acids market manufacturers during the forecast period.

 

Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the Fatty Acid market. Major players in the Fatty Acid market are:

Wilmar International Ltd.
Musim Mas
VVF Ltd.
Permata Hijau Group
Godrej Industries
KLK OLEO
Kao Corporation
BASF
Oleon NV.
KH Neochem Co., Ltd
Other Companies