Market evolution: Palm oil (CN 1511) — 2015–2025

Introduction

This report examines the evolution of EU external trade in palm oil and its fractions (Customs heading 1511, Scope & Definitions) over the period 2015–2025. The analysis covers imports, exports, partner concentration, domestic production, and product segmentation. Three main dynamics emerge from the data: a structural collapse in import volumes accompanied by a surge in unit values; a significant diversification of supplier origins away from traditional Indonesian and Malaysian dominance; and a growing vulnerability of the EU market to external price shocks, even as domestic production has expanded.

I. A market reshaped by soaring prices and collapsing volumes

EU import volumes have fallen by more than half since 2015

The most striking feature of EU palm oil trade over the decade is the divergence between value and volume. Total imports by quantity fell from 6,611,322 t in 2015 to 3,140,260 t in 2025, a decline of 52.5% (General Overview — trade). In contrast, import value fell only 14.2% over the same period, from €4,160.6 million to €3,570.4 million. This is explained by a 80.7% increase in the average import price, which rose from €629/t to €1,137/t.

Crude palm oil imports bore the brunt of the volume decline

The product breakdown reveals that the decline was concentrated in crude palm oil (CN 151110), whose import volume dropped from 4,832,535 t in 2015 to 1,678,238 t in 2025 — a fall of 65.3% (Product Segment Breakdown — compare). Refined palm oil and other fractions (CN 151190) also declined, from 1,778,787 t to 1,462,022 t (−17.8%), but more moderately. By 2025, crude and refined imports were nearly at parity in volume, whereas in 2015 crude oil accounted for roughly 73% of total import volume.

Unit prices roughly doubled across both segments

Prices for both crude and refined palm oil nearly doubled over the decade. The price of crude palm oil rose from €614/t in 2015 to €1,104/t in 2025, while the refined product climbed from €671/t to €1,175/t. The sharpest price increases occurred in 2021–2022, coinciding with global commodity surges, supply-chain disruptions, and the EU's strengthening of its Renewable Energy Directive (RED II) sustainability criteria — all of which contributed to tightening supply.

EU exports shrank in volume but maintained their value

EU exports of palm oil followed a similar volume-price pattern. Export volumes fell 47.2% from 193,483 t to 102,160 t, yet export values edged up 3.1% to €155.9 million, again reflecting higher prices. The average export price rose 95.3%, from €781/t to €1,526/t. The net trade deficit narrowed from −€4,009 million to −€3,414 million, an improvement of 14.8%.

II. Supplier diversification amid shifting geopolitical and sustainability pressures

Indonesia and Malaysia saw steep declines in EU-bound shipments

Indonesia, the EU's single largest palm oil supplier, experienced a 53.2% drop in export value to the EU, falling from €2,152 million in 2015 to €1,008 million in 2025 (General Overview — top partners). Malaysia's decline was more modest at 11.6% (from €1,301 million to €1,150 million), meaning Malaysia's share of EU imports grew relative to Indonesia's. Together, the two countries' combined share of import value fell from roughly 83% to 60% over the period.

Latin American suppliers filled part of the gap

Several Latin American countries significantly increased their palm oil exports to the EU. Guatemala's shipments grew 212.7% (from €122 million to €381 million), Honduras rose 50.9%, Colombia 32.7%, and Costa Rica surged from a negligible €1.9 million to €138 million. These shifts are consistent with EU policy signals — notably the Delegated Act under RED II that classified palm oil as a high-risk crop for indirect land-use change (ILUC) — which likely incentivised importers to diversify away from Southeast Asian suppliers perceived as carrying greater deforestation risk.

Supplier concentration (HHI) fell sharply for imports

The Herfindahl-Hirschman Index (HHI) for imports by value dropped from 3,715 in 2015 to 2,130 in 2025, a decline of 42.7% (Market Structure — concentration). This is a significant move from a highly concentrated market toward moderate concentration. By contrast, export-side HHI rose 46.7% from 2,730 to 4,006, suggesting that EU re-exports became more focused on fewer destination countries.

The Netherlands remained the EU's dominant import gateway

Among EU Member States, the Netherlands consistently ranked as the largest importer, with values holding relatively stable at around €1.51–1.52 billion (General Overview — top reporters). Italy, Spain, and Germany all saw significant declines (−32.5%, −38.0%, and −34.0% respectively), reflecting the overall volume contraction. Denmark was a notable exception, with a 52.1% increase in import value, rising to €124.6 million.

III. Growing strategic vulnerability despite expanding domestic production

EU domestic production rose, but from a low base

EU production of palm oil products increased by 39.7% in volume (from 1,235,069 t to 1,725,386 t) and by 151.0% in value (from €753 million to €1,891 million) over the period (Market Structure — production). This growth likely reflects increased refining and fractionation activity within the EU rather than primary extraction, given that palm oil cultivation is negligible in Europe. The 151% value increase outpaced the volume rise, consistent with the price inflation observed in trade data.

Net import reliance nearly doubled

Despite the growth in domestic production, the EU's net import reliance rose from 35.7% in 2015 to 66.3% in 2025, an increase of 85.4%. This apparent paradox — higher production and higher import reliance — is explained by the denominator effect: as total domestic consumption shifted composition (less palm oil used, but more of it sourced externally relative to domestic output), the relative weight of imports in satisfying EU demand increased. Trade intensity also rose from 41.9% to 70.8%, and export propensity from 6.1% to 10.3%, indicating that the EU palm oil market became more globally integrated despite shrinking volumes.

Import volatility increased across all major suppliers

Coefficient of variation (CV) data for import partners shows elevated price volatility across all major suppliers (Volatility — bars). Among the top seven import partners, Colombia (CV 0.51) and Costa Rica (CV 0.76) exhibited the highest volatility, while Malaysia (CV 0.24) and Papua New Guinea (CV 0.23) were the most stable. On the export side, destinations such as Brazil (CV 0.92), Ukraine (CV 0.88), and Russia (CV 0.87) showed considerable instability — the latter likely reflecting geopolitical disruptions. Some price shocks were detected for minor trade flows (e.g., Montenegro, Vietnam), though their share of total EU trade value was negligible (Volatility — shocks).

Specialisation patterns point to a two-speed EU market

Among EU Member States, the Netherlands and Denmark displayed the highest revealed symmetric comparative advantage (RSCA) values in palm oil trade — 0.595 and 0.584 respectively — confirming their roles as trading and processing hubs (Market Structure — specialisation). At the other end, Hungary, Slovakia, and Latvia showed extremely low specialisation (RSCA close to −1.0), indicating negligible involvement in palm oil trade. France, despite being a large economy, recorded an RSCA of −0.97, reflecting limited direct trade activity in this commodity.

Conclusion

The EU palm oil market underwent a profound transformation between 2015 and 2025. Import volumes halved while unit prices nearly doubled, resulting in a more expensive but smaller market. Supplier geography shifted markedly: Indonesia's dominant share eroded, while Central American exporters — particularly Guatemala and Costa Rica — emerged as significant alternatives. This diversification reduced concentration risk on the supply side but did not insulate the EU from price volatility. Meanwhile, the EU's net import reliance nearly doubled, underscoring the structural dependence on external palm oil even as domestic processing expanded. These trends reflect the combined influence of sustainability regulation (especially RED II and the EU Deforestation Regulation), global commodity price cycles, and evolving trade relationships — all of which will continue to shape this market in the years ahead.