InfoSAWIT, JAKARTA – Global oleochemicals production capacity continues to expand, but market demand is not keeping pace. Amid abundant supply and increasingly complex access to raw materials and export markets, industry players are once again asking a fundamental question: who truly captures value along the industry's lengthy supply chain?

That concern was highlighted by Samuel Chevigny of HBI Group, who framed the issue with a straightforward yet thought-provoking question: when production capacity grows faster than market access, where does the value ultimately flow?

The question reflects a broader shift taking place across the global oleochemicals sector. Over the past several years, production capacity for fatty acids and fatty alcohols has expanded significantly, particularly in Asia. Indonesia and Malaysia, the world's leading palm oil producers, have further strengthened their roles as global manufacturing hubs.

Industry projections indicate that Indonesia's fatty acid production alone could surpass 3.7 million tonnes in 2026, significantly exceeding output levels in other regions.

However, this expansion comes at a time when international trade is becoming increasingly restrictive. Import tariffs, sustainability regulations, and anti-dumping measures in Europe have altered trade flows, redirecting volumes that can no longer be absorbed by Western markets toward Asia.

As a result, competition is intensifying. The battle is no longer between regions but among producers operating within the same market.

This has created a growing paradox for the industry. While production capacity continues to rise, profit margins are steadily narrowing as suppliers compete for limited demand.

The challenge now facing producers is not simply increasing output, but finding sustainable pathways to market growth and value creation in an increasingly crowded landscape. (*)

(For the full analysis, read InfoSAWIT Magazine April 2026 Edition.)