Executive Summary

 

Falling Prices, Rising Margins: Why Buyers Are Moving Fast

Since mid-July 2025, Palm Fatty Acid Distillate (PFAD) has experienced a sharp shake-up in pricing, plummeting by about 15% from USD 845 to USD 715 per MT. This steep correction has opened a golden window for oleochemical producers who rely heavily on PFAD to fuel their operations, as reduced raw material costs now translate into healthier profit margins. Unlike PFAD, stearic acid—particularly the widely used 1838 grade—has only dipped between 3–5% MoM, currently priced at USD 1,050–1,080 per MT FOB Indonesia. This more modest softening reflects a stabilizing demand base for stearic acid across key industries like cosmetics, lubricants, soaps, and food production.

 

 

The PFAD price adjustment is closely tied to Indonesia’s palm oil export structure. As of July 2025, the government’s reference price for palm oil sits around USD 877.89 per MT, and while export duties remain in place, they are not yet restrictive enough to choke flows. With crude palm oil production holding steady, derivative by-products like PFAD are naturally facing price pressure. Despite this, stearic acid pricing remains relatively insulated: producers continue to benefit from widening spreads between declining feedstock costs and downstream product prices, choosing to maintain production flows while patiently allowing minor price corrections.

 

Strategic Buying Before the Market Tightens Again

Keenly aware of this margin sweet spot, major importers—particularly from India, China, and Pakistan—have stepped up procurement activities, locking in contracts ranging from 200 to 500 MT per month for arrival between August and October 2025. These players are tactically hedging their positions before the market is widely expected to tighten in Q4 2025, when seasonal shifts in Indonesian output and higher biodiesel mandates could choke PFAD availability. The move underscores just how sensitive oleochemical buyers are to early signals within the palm oil complex, using the current soft price cycle to their advantage before any potential rebound.

 

Looking ahead, industry analysts remain watchful as a combination of Indonesian export policy shifts, global oleochemical consumption trends, and biodiesel regulatory developments continue to influence pricing across PFAD and its derivatives. Although PFAD is currently trading at its lowest point since early 2025, expectations for a supply squeeze later in the year are keeping procurement teams on high alert. With PFAD down 15% and stearic acid easing only 3–5%, the market appears firmly in a strategic accumulation phase, signaling that today’s cost advantages may soon give way to tomorrow’s supply concerns.