Industry
What is Oleochemicals?
Chemicals derived from fats and oils are generally known as oleochemicals. Fatty acids, fatty esters, fatty alcohols and glycerine and all its derivatives come under oleochemicals.
The Malaysian Oleochemical Industry
The rapid production growth of palm oil and palm kernel oil in the 1980s spurred the oleochemical industry in Malaysia, including other ASEAN countries i.e. Indonesia and Thailand.
The first oleochemical plant in Malaysia was built in Prai, Penang by Palmco Holdings Berhad (now IOI Oleochemical Industries Berhad) in 1980. It produces palm-based fatty acids and glycerine to penetrate the market that was mainly dominated by tallow and coconut-based oleochemicals. Since then, the industry expanded rapidly.
Today the Malaysian oleochemical industry is a world-class player and accounts for 20% of global capacity; making Malaysia one of the world’s leading producers of oleochemicals. On average, MOMG members gave direct employment to 3 500 persons and indirect jobs for another 25 000 persons in manufacturing, transport and logistic sectors. Investments in the oleochemical industry also exceed RM 7 billion.
The oleochemical industry in Malaysia is nearly totally dependent on indigenous raw materials, i.e. palm oil and its derivatives, and palm kernel oil as the feedstocks for the various basic oleochemical products. In this respect, the Malaysian oleochemical industry contributes additional revenue over the basic value of the commodity oils.
The major end-user / applications for oleochemicals are the manufacturers of soap / detergents / surfactants, rubber and plastics, paper, lubricants, personal care products (toiletries and cosmetics), textile auxiliaries, paints and pharmaceuticals.
Industry Update
2022
1. Raw Material Supply
The total planted area for oil palm in Malaysia decreased by 1.09% to 5 674 million hectares in 2022. Sarawak remained as the largest oil palm planted state with 1.6 million hectares or 28.6% of the total oil palm planted area in Malaysia.
| Year |
2018 |
2019 |
2020 |
2021 |
2022 |
Diff (%) |
| Total Area Planted (hectares '000) |
5 849 |
5 900 |
5 865 |
5 737 |
5 674 |
-1.09 |
Source: Malaysian Palm Oil BoardThe production of crude palm oil (CPO) recorded a slight increase by 1.86% to 18.45 million tonnes. Similarly, the production of crude palm kernel oil (CPKO) also recorded a slight increase by 2.29% or to almost 2.10 million tonnes in 2022.
| Year |
2018 |
2019 |
2020 |
2021 |
2022 |
Diff (%) |
| Total Production (tonnes '000) |
| CPO |
19 516 |
19 858 |
19 140 |
18 116 |
18 453 |
+1.86 |
| CPKO |
2 299 |
2 322 |
2 203 |
2 049 |
2 096 |
+2.29 |
Source: Malaysian Palm Oil Board
2. Raw Material Usage
The main raw materials used in the manufacture of basic oleochemicals in Malaysia are crude palm kernel oil (CPKO) and palm stearin (POS). The table below shows the usage of the main raw materials in the production of basic oleochemicals by MOMG members:
| Year |
2018 |
2019 |
2020 |
2021 |
2022 |
| '000 tonnes |
| CPO |
963 |
1 050 |
837 |
776 |
729 |
| CPKO |
1 445 |
1 355 |
1 194 |
1 066 |
899 |
Source: MOMG Statistics
3. Oleochemical Exports
The total export of oleochemical products for year 2022 decreased by 5.14% to 2.73 million tonnes from 2.88 tonnes in 2021. However, export value recorded a significant increase by 31.1% to RM 22 875 million. Oleochemical exports accounts for 17.6% of the total export revenue of palm oil products for the year 2022.
| Year |
2018 |
2019 |
2020 |
2021 |
2022 |
Diff (%) |
| Total Exports (‘000 tonnes) |
3 091 |
3 280 |
3 086 |
2 882 |
2 734 |
-5.14 |
| Export Value (RM million) |
19 119 |
18 121 |
16 500 |
26 802 |
33 614 |
+31.1 |
Source: Malaysian Palm Oil Board & Department of Statistics, Malaysia
Source: Malaysian Palm Oil Board
2021
1. Raw Material Supply
The total planted area for oil palm in Malaysia decreased by 2.18% to 5 737 million hectares in 2021. Sarawak remained as the largest oil palm planted state with 1.6 million hectares or 28% of the total oil palm planted area in Malaysia.
| Year |
2017 |
2018 |
2019 |
2020 |
2021 |
Diff (%) |
| Total Area Planted (hectares '000) |
5 811 |
5 849 |
5 900 |
5 865 |
5 737 |
-2.18 |
Source: Malaysian Palm Oil BoardThe production of crude palm oil (CPO) recorded a decline by 5.35% to 18.12 million tonnes. Similarly, the production of crude palm kernel oil (CPKO) also recorded a decrease by 6.99% or to 2.05 million tonnes in 2021.
| Year |
2017 |
2018 |
2019 |
2020 |
2021 |
Diff (%) |
| Total Production (tonnes '000) |
| CPO |
19 919 |
19 516 |
19 858 |
19 140 |
18 116 |
-5.35 |
| CPKO |
2 281 |
2 299 |
2 322 |
2 203 |
2 049 |
-6.99 |
Source: Malaysian Palm Oil Board
2. Raw Material Usage
The main raw materials used in the manufacture of basic oleochemicals in Malaysia are crude palm kernel oil (CPKO) and palm stearin (POS). The table below shows the usage of the main raw materials in the production of basic oleochemicals by MOMG members:
| Year |
2017 |
2018 |
2019 |
2020 |
2021 |
| '000 tonnes |
| CPO |
830 |
963 |
1 050 |
837 |
776 |
| CPKO |
1 269 |
1 445 |
1 355 |
1 194 |
1 066 |
Source: MOMG Statistics
3. Oleochemical Exports
The total export of oleochemical products for year 2021 decreased by 6.6% to 2.88 million tonnes from 3.09 million tonnes in 2020. The lower export volumes which were attributed by lower demand from major export markets (such as EU, US, China and India) contributed to the decrease. However, export value increased by 6.3% to RM 17445 million. Oleochemical exports accounts for 17% of the total export revenue of palm oil products for the year 2021.
| Year |
2017 |
2018 |
2019 |
2020 |
2021 |
Diff (%) |
| Total Exports (‘000 tonnes) |
2 774 |
3 091 |
3 280 |
3 099 |
2 882 |
-6.6 |
| Export Value (RM million) |
20 395 |
19 119 |
18 121 |
16 500 |
26 802 |
+6.3 |
Source: Malaysian Palm Oil Board & Department of Statistics, MalaysiaChina surpassed EU as Malaysia’s top export destination for 4 consecutive years since 2018; accounting to 18.2% of the total oleochemical exports. Major export markets for the Malaysian oleochemical industry in 2021 were:
| Export Markets |
2017 |
2018 |
2019 |
2020 |
2021 |
| ‘000 tonnes |
% |
‘000 tonnes |
% |
‘000 tonnes |
% |
‘000 tonnes |
% |
‘000 tonnes |
% |
| China |
0.44 |
15.9 |
0.53 |
17.2 |
0.58 |
17.5 |
0.55 |
17.9 |
0.53 |
18.2 |
| EU |
0.45 |
16.2 |
0.44 |
14.2 |
0.48 |
14.6 |
0.44 |
14.3 |
0.41 |
14.3 |
| US |
0.31 |
11.1 |
0.33 |
10.7 |
0.35 |
10.7 |
0.32 |
10.4 |
0.29 |
10.1 |
| Japan |
0.23 |
8.5 |
0.24 |
7.9 |
0.23 |
6.9 |
0.19 |
6.1 |
0.22 |
7.5 |
Source: Malaysian Palm Oil Board
Source: Malaysian Palm Oil Board
2020
1. Raw Material Supply
The total planted area for oil palm in Malaysia decreased by 0.6% to 5.87 million hectares in 2020. Sarawak remained as the largest oil palm planted state with 1.59 million hectares or 27% of the total oil palm planted area in Malaysia.
| Year |
2016 |
2017 |
2018 |
2019 |
2020 |
Diff (%) |
| Total Area Planted (hectares '000) |
5 738 |
5 811 |
5 849 |
5 900 |
5 865 |
-0.6 |
Source: Malaysian Palm Oil BoardThe production of crude palm oil (CPO) recorded a decline by 3.6% to 19.14 million tonnes. According to the Malaysian Palm Oil Board (MPOB), the decline was attributed to the lower FFB processed and its yield. However, the production of crude palm kernel oil (CPKO) saw a decrease by 5.1% or to 2.2 million tonnes in 2020.
| Year |
2016 |
2017 |
2018 |
2019 |
2020 |
Diff (%) |
| Total Production (tonnes '000) |
| CPO |
17 319 |
19 919 |
19 516 |
19 858 |
19 140 |
-3.6 |
| CPKO |
1 959 |
2 281 |
2 299 |
2 322 |
2 203 |
-5.1 |
Source: Malaysian Palm Oil Board
2. Raw Material Usage
The chart below shows the usage of raw materials in the production of oleochemicals in Malaysia:
3. Oleochemical Capacity
The oleochemical capacities by MOMG members for the year 2020 are presented as follows:
| Year |
2020 |
| '000 tonnes |
| Fatty Acids |
2 110 |
| Methyl Esters |
698 |
| Fatty Alcohol |
613 |
| Refined Glycerine |
361 |
Source: AOMG & MOMG Statistics
4. Oleochemical Exports
The total export of oleochemical products for year 2020 decreased by 5.5% to 3.10 million tonnes from 3.28 million tonnes in 2019. Lower export volumes attributed by lower demand from major export markets (such as Japan, EU, US, China and South Korea) contributed to the decrease. In tandem with the decrease, export value also declined by 9.4% to RM 16 415 million. Oleochemical exports accounts for 22.4% of the total export revenue of palm oil products for the year 2020.
| Year |
2016 |
2017 |
2018 |
2019 |
2020 |
Diff (%) |
| Total Exports (‘000 tonnes) |
2 758 |
2 774 |
3 091 |
3 280 |
3 099 |
-5.5 |
| Export Value (RM million) |
16 838 |
20 395 |
19 119 |
18 121 |
16 500 |
-9.4 |
Source: Malaysian Palm Oil Board & Department of Statistics, MalaysiaChina surpassed EU as Malaysia’s top export destination for 3 consecutive years since 2018; accounting to 17.9% of the oleochemical exports. Major export markets for the Malaysian oleochemical industry in 2020 were:
| Export Markets |
2016 |
2017 |
2018 |
2019 |
2020 |
| ‘000 tonnes |
% |
‘000 tonnes |
% |
‘000 tonnes |
% |
‘000 tonnes |
% |
‘000 tonnes |
% |
| China |
0.39 |
14.2 |
0.44 |
15.9 |
0.53 |
17.2 |
0.58 |
17.5 |
0.55 |
17.9 |
| EU |
0.39 |
14.2 |
0.44 |
15.9 |
0.53 |
17.2 |
0.58 |
17.5 |
0.55 |
17.9 |
| US |
0.27 |
9.6 |
0.31 |
11.1 |
0.33 |
10.7 |
0.35 |
10.7 |
0.32 |
10.4 |
| Japan |
0.23 |
8.5 |
0.23 |
8.5 |
0.24 |
7.9 |
0.23 |
6.9 |
0.19 |
6.1 |
Source: Malaysian Palm Oil Board
Source: Malaysian Palm Oil Board
2018
1. Raw Material Supply
The total planted area for oil palm in Malaysia increased by 0.7% to 5.85 million hectares in 2018. Sarawak remained as the largest oil palm planted state for the second year with 1.57 million hectares or 26.9% of the total oil palm planted area in Malaysia.
| Year |
2014 |
2015 |
2016 |
2017 |
2018 |
Diff (%) |
| Total Area Planted (hectares '000) |
5392 |
5643 |
5738 |
5811 |
5849 |
+0.7 |
Source: Malaysian Palm Oil BoardThe production of crude palm oil (CPO) recorded a decline by 2% to 19.52 million tonnes. According to the Malaysian Palm Oil Board (MPOB), the decline was attributed to the lower FFB processed and its yield. However, the production of crude palm kernel oil (CPKO) saw a slight increase by 0.8% or close to 2.3 million tonnes in 2018.
| Year |
2014 |
2015 |
2016 |
2017 |
2018 |
Diff (%) |
| Total Production (tonnes '000) |
| CPO |
19666 |
19961 |
17319 |
19919 |
19516 |
-2.0 |
| CPKO |
2277 |
2276 |
1959 |
2281 |
2299 |
+0.8 |
Source: Malaysian Palm Oil Board
2. Raw Material Usage
The main raw materials used in the manufacture of basic oleochemicals in Malaysia are crude palm kernel oil (CPKO) and palm stearin (POS). The table below shows the usage of the main raw materials in the production of basic oleochemicalsby MOMG members:
| Year |
2018 |
| '000 tonnes |
| POS |
963 |
| CPKO |
1445 |
Source: MOMG Statistics
3. Oleochemical Capacity
Malaysia continues to be one of the leading producers and exporters of basic oleochemicals in the world. The oleochemical capacities by MOMG members for the year 2018 are presented as follows:
| Year |
2018 |
| '000 tonnes |
| Fatty Acids |
2257 |
| Methyl Esters |
708 |
| Fatty Alcohol |
530 |
| Refined Glycerine |
364 |
Source: AOMG Statistics
4. Oleochemical Exports
The total export of oleochemical products for year 2018 increased by 11.4% to 3.09 million tonnesfrom 2.77 million tonnesin 2017, due to stronger demands from China, UAE, India, South Korea, Turkey and USA. Despite export volumes being higher, however the export value recorded a decline of 6.3% to RM 19 119 million. Oleochemical export accounts for 28.3% of the total export revenue of palm oil products for the year.
| Year |
2014 |
2015 |
2016 |
2017 |
2018 |
Diff (%) |
| Total Exports (‘000 tonnes) |
2 828 |
2 850 |
2 758 |
2 774 |
3 091 |
+11.4 |
| Export Value (RM million) |
11 291 |
11 295 |
16 838 |
20 395 |
19 119 |
-6.3 |
Source: Malaysian Palm Oil Board& Department of Statistics, MalaysiaChina surpassed EU as Malaysia’s main export market for the year 2018. This could be attributed to the GSP status by EU on Malaysian products. The other major export markets for the Malaysian oleochemical industry for the same year were:
| Export Markets |
2014 |
2015 |
2016 |
2017 |
2018 |
| ‘000 tonnes |
% |
‘000 tonnes |
% |
‘000 tonnes |
% |
‘000 tonnes |
% |
‘000 tonnes |
% |
| EU |
0.64 |
22.6 |
0.56 |
19.8 |
0.53 |
19.2 |
0.45 |
16.2 |
0.44 |
14.2 |
| China |
0.43 |
15.2 |
0.41 |
14.4 |
0.39 |
14.2 |
0.44 |
15.9 |
0.53 |
17.2 |
| US |
0.26 |
9.2 |
0.25 |
8.9 |
0.27 |
9.6 |
0.31 |
11.1 |
0.33 |
10.7 |
| Japan |
0.22 |
7.8 |
0.23 |
8.2 |
0.23 |
8.5 |
0.23 |
8.5 |
0.24 |
7.9 |
Source: Malaysian Palm Oil Board
Source: Malaysian Palm Oil Board
