US oleochemical producers will continue to switch operations from tallow to palm-based fatty acids this year, according to a report by Argus Media.

With US buyers looking for plant-based alternatives for their personal care and cleaning products, producers with the capability had switched their operations to palm oil products while others were planning to shift production methods, the 20 December report said.

Meanwhile, red meat rendering had declined due to changing food habits in the USA.

According to US Department of Agriculture data, cattle slaughter rates have been declining, impacting supplies of rendered fats for use in soaps, animal feed and feedstocks for renewable biofuels and oleochemicals.

Although tallow consumption continued to grow in the US biofuels industry – with biofuels firms having met their mandates for 2023 – demand had fallen and US tallow prices had declined.

However, tallow prices remained higher than palm oil feedstock prices, which remained the most economical option for oleochemicals producers.

With palm-based products growing in popularity, producers which manufacture purely tallow-based fatty acids risk being priced out of the market, according to industry sources.

With freight rates at depressed levels, the cost of shipping palm oil from southeast Asia was also an economical option for producers, the report said.

US crude palm oil (CPO) imports had been steadily increasing and were expected to rise this year as palm-based production increased.

According to Global Trade Tracker (GTT) data, the USA imported 1.32M tonnes of CPO imports from January-September last year. If CPO imports continued at the same pace throughout the fourth quarter, this would give a yearly total of 1.77M tonnes, the USA’s highest import total recorded by GTT.

Palm-based fatty acids imports to the USA were also expected to increase in 2024, with levels rising since the introduction of EU anti-dumping duties on Indonesian fatty acids imports last year.

GTT data showed fatty acid exports — excluding tall oil fatty acids — from Indonesia to the USA were 101,000 tonnes in the first six months of 2023, a rise of 17% on the 86,000 tonnes that was shipped during the same period the previous year and almost double the 53,000 tonnes exported to the USA during the same period of 2021.

With consumption from China not expected to improve significantly this year, the USA remained one of the few markets open to shipments of palm-based fatty acids leading to expectations that imports would continue increasing this year, the report said.