Market Insight
27 October 2025
Palm Derivatives
In the oleochemical trade, procurement teams have historically been laser-focused on the price of RBD Palm Stearin, and for good reason. It’s the primary feedstock, typically accounting for 65-75% of the input cost for Methyl Stearate. However, a myopic focus on palm is increasingly becoming a critical strategic error. The "other half" of the molecule, Methanol, is quietly emerging as the new driver of short-term price volatility and margin erosion.
Navigating this dual-feedstock risk is where seasoned partners add immense value. At Tradeasia International, we've built our reputation on seeing the entire supply chain. We understand that your landed cost isn't just about palm; it's about managing the complex, often uncorrelated, costs of all chemical inputs.
Methanol, which accounts for the remaining 25-35% of the input cost, trades on entirely different fundamentals. It isn't driven by agricultural cycles; it's driven by energy prices, namely natural gas and coal. This creates a dangerous divergence for unwary buyers. For instance, in the third quarter of 2024, many buyers were relieved as Palm Stearin prices softened by 8%. Yet, their final Methyl Stearate quotes actually increased. The reason? Regional Methanol spot prices (CFR Asia) had simultaneously surged by 22% due to offshore natural gas supply disruptions.
This isn't just a minor fluctuation. The math is simple but brutal: a sudden $50/ton increase in the price of Methanol directly translates to a $15 to $18/ton increase in the production cost of Methyl Stearate. As we look toward 2025, global energy markets remain exceptionally tight, meaning Methanol volatility is not just a risk; it's a near certainty. As noted on Oleochemicals Asia, producers are increasingly unwilling to absorb this volatility and are moving to shorter quote validities. A successful procurement strategy in this new era requires a dual-focus: one eye on the palm plantation, and the other firmly on global gas and coal markets.
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