Market evolution: Industrial fatty acids (CN 3823) — 2015–2025

Introduction

This report examines the evolution of EU trade in CN 3823 — a broad category covering industrial monocarboxylic fatty acids, acid oils from refining, and industrial fatty alcohols — over the period 2015–2025. The product heading encompasses five sub-categories: stearic acid (382311), oleic acid (382312), tall oil fatty acids (382313), other monocarboxylic fatty acids and acid oils (382319), and industrial fatty alcohols (382370). Together, these products serve as critical feedstocks for surfactants, cosmetics, lubricants, candles, rubber processing, and numerous other industrial applications.

Over the decade under review, the EU's position in this market has undergone a profound transformation. Imports have surged in value by 142%, while exports have grown only modestly at 23%. The EU's net import reliance has climbed from 13.4% to 52.9%, and domestic production volumes have declined by 29%. These headline figures point to a structural reorientation of the EU's fatty-acid supply chain that warrants detailed analysis.

The following three sections unpack the main dynamics: the geographic and volume shift toward Southeast Asian suppliers, the dramatic price inflation seen especially in 2021–2022, and the changes in product composition and market concentration that have reshaped the competitive landscape.

1. The surge in EU import dependence and the pivot toward Southeast Asia

The most striking feature of the 2015–2025 period is the EU's rapidly growing reliance on extra-EU imports of industrial fatty acids and alcohols. This section traces the quantitative expansion of imports, identifies the key supplying countries, and contextualises the simultaneous contraction of EU domestic production.

1.1 Import volumes and values have far outpaced exports

Between 2015 and 2025, EU imports of CN 3823 grew as follows:

The trade deficit widened from €581 million in 2015 to €1,962 million in 2025, a deterioration of 237%. Import volumes peaked at 2,464 kt (in 2022), more than nine times the EU's export volume in the same year, underscoring the scale of the structural imbalance.

1.2 Indonesia and Malaysia have consolidated their dominance as suppliers

The growth in imports has been overwhelmingly driven by two Southeast Asian nations whose economies are anchored in palm oil and its derivatives.

Indonesia and Malaysia together accounted for €1,847 million in import value in 2025 — roughly 73% of all extra-EU imports by value. Indonesia's import value reached a peak of €1,820 million in 2022 before easing somewhat. The rise of Argentina (+400%) and India (+513%) from lower bases indicates a broadening of palm- and soy-based supply chains beyond the traditional two-country axis.

Meanwhile, the United Kingdom — once the EU's fifth-largest import source at €100 million — saw its shipments collapse to just €10 million (−89.7%), a decline almost certainly linked to the UK's departure from the EU single market and customs union.

1.3 EU domestic production has contracted even as demand has grown

EU production volumes tell a starkly different story from the import figures:

The simultaneous decline in volume (−29%) and rise in value (+25.7%) implies a substantial increase in unit production values — likely reflecting both higher raw-material costs (palm, tallow, rapeseed oils) and a possible shift toward higher-value, more specialised output. Nevertheless, the contraction in physical output has left a widening supply gap that imports have had to fill, directly driving the surge in net import reliance from 13.4% to 52.9%.

1.4 EU trade intensity has deepened across the board

The trade intensity of the EU in CN 3823 rose from 40.1% to 73.1%, while export propensity increased from 19.2% to 33.7%. These rising ratios indicate that the EU's fatty-acid market has become substantially more exposed to international trade flows — both as a buyer and as a seller — than it was at the start of the period. While export propensity has grown, it has not kept pace with the import surge, reinforcing the growing deficit.

2. Price dynamics and the 2021–2022 commodity shock

The second major dynamic of the period is the pronounced inflation in both import and export unit values, which accelerated sharply during the 2021–2022 commodity price cycle. This section examines the magnitude and timing of these price movements and their sector-specific manifestations.

2.1 A broad-based price escalation accelerated after 2020

Across nearly all product sub-categories, unit prices remained relatively stable or even declined between 2015 and 2019, before inflecting sharply upward in 2020–2022. The table below shows the evolution of import prices by sub-product:

Every sub-product saw its import price at least double between the pre-shock trough and the 2022 or 2023 peak. Oleic acid prices more than doubled from €955/t (2020) to a peak of €2,157/t (2022). Fatty alcohols peaked at €2,269/t in 2022. While prices have retreated somewhat by 2025, they remain well above pre-2020 levels across the board.

2.2 Export prices followed a similar trajectory, amplifying revenue effects

EU export prices rose in tandem, as would be expected given the global nature of commodity markets:

Notably, export prices generally exceed import prices for the same sub-product — consistent with the EU exporting higher-grade or more processed material. For instance, fatty alcohol export prices in 2025 stood at €2,576/t versus import prices of €2,099/t.

2.3 Specific price shocks were detected in several partner relationships

The volatility analysis identified several notable shock events concentrated in 2021–2022:

The extremely high abnormality score for EU exports to Türkiye (43.3) in 2022 — with an 84.3% price shift — points to an exceptional event. This coincides with the global commodity price spike of 2022, which was amplified by the energy crisis following Russia's invasion of Ukraine and the surge in vegetable oil prices (palm, sunflower, soy). The import volatility data further show that several partners exhibited high coefficient-of-variation scores — notably the United Kingdom (0.86), Türkiye (1.38), and Brazil (1.04) — indicating persistent instability in bilateral trade flows with these partners.

3. Structural shifts in product composition and trade concentration

Beyond volume and price, the 2015–2025 period saw meaningful shifts in the product mix traded, in the geographic concentration of supply, and in the intra-EU specialisation pattern. This section examines these structural changes.

3.1 The "other fatty acids" category (382319) has become the dominant import segment

The product sub-segments have evolved at very different rates, as the product breakdown shows:

The most dramatic shift is the near-total collapse of tall oil fatty acid imports: from 15,387 tonnes in 2015 to a mere 831 tonnes in 2025 (−94.6%). Tall oil is a by-product of the kraft pulping process, primarily sourced from Nordic and North American paper mills. Its virtual disappearance from EU import flows likely reflects the restructuring of the European pulp industry, increased domestic tall oil utilisation for biofuel production, and reduced availability from traditional suppliers.

Conversely, imports of category 382319 — which covers palm-kernel, coconut, and other tropical-source fatty acids not elsewhere specified — surged by 71% in volume and 178% in value, making it by far the largest segment. This aligns with the dominance of Indonesian and Malaysian suppliers noted in Section 1.

3.2 The EU has become a net importer of most sub-products

Examining import versus export volumes by sub-product in 2025 reveals the extent of the structural deficit:

Only in tall oil fatty acids does the EU maintain a net export position, consistent with its historically strong pulp-and-paper sector. In every other sub-product, the EU runs a substantial net import deficit.

3.3 Import supply has become more concentrated while exports have diversified

The Herfindahl-Hirschman Index (HHI) traces the degree of partner concentration:

The import HHI rising above 2,500 places EU imports in the "moderately concentrated" range by standard competition benchmarks, reflecting the growing dominance of Indonesia and Malaysia. The simultaneous decline in export HHI indicates that EU exporters have somewhat diversified their destination markets — with China (from €21M to €53M, +155%) and Singapore (from €14M to €22M, +58%) gaining share alongside the traditional UK and US markets.

3.4 Intra-EU specialisation is concentrated in a handful of Member States

In 2025, the most specialised EU Member States in CN 3823 exports were:

The Netherlands stands out with 45.8% of EU production and a strong revealed comparative advantage (RCA of 3.16), reflecting its position as a major oleochemical hub — home to large-scale processing facilities for imported palm and coconut oils. Finland and Sweden's specialisation is likely linked to their tall oil fatty acid production from the Nordic kraft pulp industry. On the import side, the Netherlands dominates as well, accounting for €1,399 million of EU imports in 2025 (up 111% from 2015), while Italy saw the most explosive growth from a low base: imports rose from €25 million to €490 million (+1,831%).

Conclusion

The EU trade market for industrial fatty acids, acid oils from refining, and industrial fatty alcohols (CN 3823) has undergone a fundamental transformation between 2015 and 2025. Three defining themes emerge from the data.

First, the EU has shifted from near self-sufficiency to heavy import dependence. Net import reliance more than quadrupled from 13.4% to 52.9%, driven by a 29% decline in domestic production volumes and a 55% surge in import volumes. Indonesia and Malaysia — the world's leading palm oil producers — now supply nearly three-quarters of the EU's extra-EU imports by value, creating a high degree of geographic concentration in the supply chain.

Second, the 2021–2022 commodity price supercycle left a lasting imprint. Import and export unit prices roughly doubled across most sub-segments, with peak prices in 2022 often exceeding €2,000 per tonne. Although prices have partially retraced, they remain well above pre-2020 levels, and several extreme price shocks were detected in bilateral flows with Türkiye, China, and South Africa.

Third, the product composition of trade has shifted. Tall oil fatty acid imports have all but disappeared, while the broad "other monocarboxylic fatty acids" category — dominated by palm-derived products — now accounts for nearly 73% of import value. Import supply has become more concentrated (HHI rising 25%), while EU exports have modestly diversified.

Looking forward, the EU's deepening dependence on Southeast Asian palm-derived feedstocks raises important questions about supply-chain resilience, sustainability compliance (notably the EU Deforestation Regulation), and the strategic role of domestic oleochemical production. The data suggests that any disruption to palm oil supply from Indonesia or Malaysia would have outsized consequences for the EU's fatty-acid value chain.