Market evolution: Lanolin and wool grease (CN 1505) — 2015–2025

Introduction

This report analyses the EU's external trade in CN 1505 — wool grease and fatty substances derived therefrom, including lanolin — over the period 2015–2025. Lanolin is a niche but strategically relevant product used across the cosmetics, pharmaceutical, and industrial sectors. Over the examined decade, the EU has remained a structural net importer, yet the market has undergone significant transformations: traded volumes have declined while unit values have surged, major trade partnerships have been reshuffled, and the EU's supply base has become more concentrated. The following sections explore these dynamics in detail, drawing on the general trade overview, partner-level data, and vulnerability indicators.

1. A Volume-to-Value Shift: Less Product, Higher Prices

1.1 EU production has contracted sharply in volume while gaining in value

EU domestic production volumes of lanolin and wool grease fell by 53.9% over the period, declining from 7,785 tonnes to 3,585 tonnes. At the same time, production value rose by 75.6%, from €14.7 million to €25.8 million. This implies that the effective unit value of EU production roughly tripled over the decade — a sign of upstream restructuring toward higher-grade, higher-margin lanolin derivatives, likely driven by the cosmetics and pharmaceutical sectors.

1.2 Import volumes fell modestly while export volumes declined more steeply

The data shows a clear pattern: the EU's export unit price grew six times faster than the import unit price. EU exports are increasingly composed of higher-value refined lanolin products, while imports remain weighted toward cruder or mid-grade wool grease. This is consistent with the EU acting as a processing hub: importing raw material, refining it domestically, and exporting at a premium.

1.3 The trade deficit has persisted but shows signs of stabilisation

The EU's trade balance in CN 1505 has remained in deficit throughout the period. The first-year deficit stood at −€22.5 million and the last-year deficit was virtually identical at −€22.5 million. However, this apparent stability masks considerable oscillation: the deficit narrowed to −€15.9 million in one year and widened to −€38.6 million in another. The net import reliance hovered near 52% at both endpoints, but ranged from a low of 34.3% to a high of 72.6%, indicating significant year-to-year sensitivity to supply and demand fluctuations.

2. Geographic Reorientation: Brexit, Asian Diversification, and New Export Markets

2.1 The United Kingdom's role has fundamentally changed on both sides

The most striking geographic shift involves the United Kingdom. As an import source, the UK remained the EU's largest supplier throughout, rising from €17.3 million to €18.3 million (+5.8%). As an export destination, however, EU shipments collapsed from €9.3 million to just €1.3 million (−85.9%). This dramatic divergence — the UK remaining a key supplier while virtually ceasing to be a customer — is consistent with the post-Brexit trade regime: UK-origin wool grease continued to flow into the EU (Britain is a major sheep-farming nation), while EU exports to the UK faced new customs frictions, redirecting those flows elsewhere.

2.2 Asia has become a larger import source, with Japan and China gaining ground

China and Japan have consolidated their positions as the EU's second- and third-largest import suppliers. Japan's growth of 50.4% is notable and likely reflects its strong position in refined pharmaceutical-grade lanolin. Meanwhile, Singapore's imports collapsed entirely (from €3.8 million to essentially zero), and New Zealand's declined by 46.6% — likely reflecting the global contraction in sheep flock sizes in Oceania and the shift of trading hubs.

2.3 EU exports have pivoted toward the Americas and Southeast Europe

With the UK market shrinking, EU exporters redirected lanolin toward new destination markets:

Mexico's surge (+550.5%) is particularly striking, making it the EU's single largest export destination by 2025. This likely reflects the growth of Mexico's cosmetics and personal care manufacturing sector, as well as nearshoring dynamics. The growth of exports to Serbia and India further points to a diversification strategy away from traditional Western European and Anglo-Saxon markets.

2.4 Within the EU, Germany has emerged as the dominant hub

Looking at EU member states' trade, Germany has consolidated its role as the bloc's primary trading hub for lanolin:

• Germany's extra-EU imports grew from €18.9 million to €24.5 million (+29.2%), making it by far the largest importer.
• Germany's extra-EU exports surged from €4.5 million to €14.1 million (+212.2%), overtaking Belgium and the Netherlands.
• Conversely, the Netherlands saw its exports collapse from €8.6 million to €0.6 million (−92.7%), even as its imports grew by 165.3%.

This pattern suggests a relocation of processing and re-export activity from the Benelux ports toward Germany, potentially linked to Germany's strong chemical and pharmaceutical industry base.

3. Rising Supply Concentration and Episodic Price Shocks

3.1 Import concentration has increased, narrowing the supplier base

The Herfindahl-Hirschman Index (HHI) for imports rose from 2,430 to 2,999 (+23.4%) by value and from 2,070 to 2,938 (+41.9%) by volume. An HHI approaching 3,000 indicates moderate-to-high concentration, meaning the EU has become more dependent on a smaller number of import partners. The exit of Singapore and the decline of New Zealand as suppliers contributed directly to this concentration. By 2025, the United Kingdom and China together accounted for a dominant share of import value.

In contrast, the export HHI fell from 2,080 to 1,605 (−22.8%) by value and from 2,325 to 1,050 (−54.8%) by volume. This divergence — import concentration rising while export concentration falls — reflects a healthy diversification of EU outbound sales, even as the inbound supply chain becomes more fragile.

3.2 Supply volatility varies widely across partners

The coefficient of variation (CV) of import values reveals that some suppliers are far less stable than others:

• Low volatility (CV < 0.2): Japan (0.13), United Kingdom (0.20) — these are reliable, steady suppliers.
• Moderate volatility (CV 0.2–0.4): China (0.25), Uruguay (0.26), Argentina (0.33).
• High volatility (CV > 0.4): New Zealand (0.45), Australia (0.60), Singapore (0.68), Taiwan (0.69), Norway (1.76).

For exports, the US (0.15) and Serbia (0.22) represent stable demand partners, while India (1.01) and Japan (1.37) show highly erratic EU export flows.

3.3 Specific price shocks highlight supply-chain vulnerabilities

The shock detection analysis identified three significant price shock events:

The 2021 China import price shock is the most consequential, given that China accounted for 28.2% of EU import value. A 54% price spike in this context likely reflected a combination of post-COVID logistics disruptions, raw material tightness, and possibly feedstock competition from China's domestic cosmetics industry. The 2019 Thailand export shock and 2023 India export shock, while large in percentage terms, affected much smaller trade shares and therefore had limited macroeconomic impact on the overall EU lanolin market.

3.4 Specialisation remains concentrated in the Benelux, with Germany playing a different role

According to the Revealed Symmetric Comparative Advantage (RSCA) index for 2025, Belgium (RSCA = 0.62) and the Netherlands (RSCA = 0.42) are the most specialised EU exporters of CN 1505 relative to their overall trade profiles. Germany, despite being the largest absolute trader, has a negative RSCA (−0.24), meaning lanolin represents a less-than-proportional share of its total exports. This is consistent with Germany's role as a broad-based industrial exporter for which lanolin is only one of thousands of traded products. The Benelux countries' specialisation, by contrast, likely reflects their historical role as wool processing and refining centres within Europe.

Conclusion

The EU lanolin and wool grease market has undergone a quiet but structural transformation between 2015 and 2025. Traded volumes have declined — both in production (−53.9%) and in import/export quantities — while unit values have risen significantly, especially on the export side (+61.4%). This points to an EU industry that is moving up the value chain, importing raw wool grease in moderate quantities and exporting refined, higher-margin lanolin products.

Geographically, the most consequential shift has been the near-total collapse of EU exports to the United Kingdom (−85.9%), likely driven by Brexit-related trade frictions. This loss has been more than offset by spectacular growth in exports to Mexico (+550.5%), the United States (+57.5%), Serbia (+145.3%), and India (+363.2%). On the import side, the consolidation of China and Japan as top suppliers — combined with the exit of Singapore and decline of New Zealand — has pushed import concentration upward (HHI from 2,430 to 2,999).

Despite these shifts, the EU's net import reliance has remained stable at approximately 52%, and the trade deficit has barely changed in absolute terms. The market's main vulnerability lies not in the overall balance but in the increasing concentration of supply: fewer partners delivering larger shares means greater exposure to individual-country disruptions, as the 2021 China price shock demonstrated. Continued monitoring of supply diversification and the development of alternative sourcing — including from Southern Hemisphere producers in Uruguay and Argentina — will be important for maintaining the resilience of this niche but multi-sector-relevant market.