The complexity of the oleochemical market often peaks in November, transforming routine transactions into a strategic balancing act. At the heart of this tension lies the price-cost paradox for Stearic Acid (SA) producers: feedstock costs are rising sharply, but the final product price lags, squeezing profitability. This is not just a statistical anomaly; it is the reality of Q4 market friction.

The Feedstock Squeeze: Where Cost Pressures Begin

Our analysis for the first half of November shows a significant divergence between upstream and downstream pricing. CPO futures, the primary determinant of SA cost, experienced a sharp 6.8% month-over-month (MoM) increase. This movement was substantially driven by regulatory actions, particularly the continued strong allocation of CPO towards mandated biodiesel programs (such as Indonesia’s B35 program), which tightens the supply of Palm Stearin. Producers are essentially competing with fuel mandates for their raw materials. However, the price of Triple Pressed Stearic Acid (TPSA) spot contracts responded with a mere 3.1% rise in the same period. This indicates market resistance and limited willingness from industrial buyers to absorb the full cost increase immediately. The resulting estimated 4.3% reduction in refining margin compared to the Q3 average poses a clear threat to short-term profitability. Finding partners who can navigate this supply complexity is essential; after all, the bedrock of successful oleochemical trading is securing reliable, high-volume palm supplies, a service Tradeasia International has consistently delivered across continents. This ability to manage feedstock stability directly addresses the current margin pressure.

Inventory and Strategic Forward Planning

Despite the cost pressure, the supply side provides a mild counterbalance. We are seeing reduced availability, as inventory levels of SA in major logistical hubs like Rotterdam and Shanghai were reported to be down by 4.5% from the start of Q4. This supports the existing price level and suggests future upward movement is inevitable once current stocks are depleted. Buyers, recognizing this impending shift, significantly increased their forward commitment; futures volumes for January SA delivery rose by 15% in the final week of October. This spike signals an anticipation of higher prices in early 2026, driven by tightening winter logistics and sustained feedstock costs. For palm trading firms, November is the strategic window to execute robust hedging strategies and secure favorable term contracts, leveraging these forward data points to mitigate the current $15-$20/MT tightening on refining margins and ensure continuity into the new fiscal quarter.

 

Sources

  1. "Understanding Oleochemical Grade Specifications and Price Stability" https://www.oleochemicalsasia.com/stearic-acid-specifications-pricing

  2. "Q4 2025 Global Commodity Futures Trading Volume Report" https://www.cmegroup.com/q4-futures-report

  3. "November 2025: Southeast Asian Palm Oil Biodiesel Mandate Impact Analysis" https://www.eia.gov/biofuels-mandate-analysis