Snapshot of the Oleochemicals Market in Egypt

Background

In Egypt, there is a growing demand for oleochemicals derivatives in different industries. Key factors that are driving the oleochemicals market growth include increasing demand for eco-friendly products and the growth of major end-use industries like personal care, food & beverages, soaps & detergents and paints. The growing demand for natural personal care products makes use of oleochemicals, this trend is likely to continue in the coming years. Manufactures are looking to increase oleochemical products in their applications to meet the growing consumers’ demand for natural ingredients in their products replacing the petrochemicals.

The demand is primarily met through importation since local production is very limited. There are only 2 main producers of basic oleochemicals products in Egypt namely Royal Chemicals and Oleomisr.

Some of the significant oleochemical products in the market include glycerol, fatty alcohols, fatty acid methyl esters, and fatty acids. Fatty acids represent one of the largest product applications as they are widely used in numerous industries including pharmaceutical, food, lubricants, and paints & coatings.

The Egyptian food emulsifiers market represents good opportunity as well, it is projected to register a CAGR of 4% in the coming 5 years. The Egypt food emulsifier market is segmented by application (Bakery, Confectionery, Beverages, Dairy and Frozen Products, Meat, Poultry and Seafood, and Other Applications. The demand for convenient foods has recorded robust growth, owing to the changing lifestyles and dietary preferences. The Egyptian food emulsifiers market is consolidated, as the major players hold a majority of the market share. The key players in the market are Cargill, DuPont, Kerry Group, BASF SE, and Puratos.

The emergence of the COVID-19 pandemic has surged the demand for hand sanitizers exponentially. Glycerin is mainly used in small proportions to manufacture hand rubs and sanitizers. It also increased the demand for soap production and cleaning products.

Imports of specific oleochemicals products in Egypt (tonnes)
Commodity 2020
3823. Industrial monocarboxylic fatty acids; acid oils from refining; industrial fatty alcohols. 16,426.24
1520. Glycerol, crude; glycerol waters and glycerol lyes. 6,205.83

Source: Trend Economy

Top trading partners (import of “Industrial monocarboxylic fatty acids; acid oils from refining; industrial fatty alcohols.”) of Egypt in 2020:

  • Malaysia with a share of 36% (5.63 million US$)
  • Korea with a share of 21% (3.39 million US$)
  • Indonesia with a share of 15.1% (2.34 million US$)
  • Germany with a share of 7.02% (1.09 million US$)
  • Finland with a share of 3.07% (477 thousand US$)
  • Belgium with a share of 2.86% (444 thousand US$)
  • China with a share of 2.29% (357 thousand US$)
  • India with a share of 2.17% (338 thousand US$)
  • Italy with a share of 1.72% (268 thousand US$)
  • Brazil with a share of 1.46% (227 thousand US$)

Imports’ structure of Industrial monocarboxylic fatty acids; acid oils from refining; industrial fatty alcohols. – to Egypt in 2020 represented by the following main commodity groups:

  • 64% (10 million US$): 382311 – Stearic acid
  • 14.3% (2.23 million US$): 382319 – Industrial monocarboxylic fatty acids other than stearic acid/oleic acid/tall oil fatty acids; acid oils from refining
  • 14% (2.18 million US$): 382370 – Industrial fatty alcohols
  • 5.22% (811 thousand US$): 382313 – Tall oil fatty acids
  • 1.4% (217 thousand US$): 382312 – Oleic acid

Malaysian Palm-based Oleochemicals Exports to Egypt

In 2020, total Malaysian palm-based oleochemical products exported to Egypt was recorded at 36,365 MT. The main exported products were soap noodles/stock/blend, accounted for 54.4% of the export volume, followed by glycerine at 11.4%, and stearic acid/ stearic acid flakes 8%.

The Malaysian exports have been fluctuating in the last five years with highest volume recorded in 2019 then dropped by 23% in 2020. In Egypt, the period from the second half of March 2020 witnessed a slowdown in the production system due to the partial stop of economic activity. Lockdown imposed due to outbreak of the COVID-19 pandemic has resulted in temporary ban on the import and export; thereby, disrupting the supply chain and severely affected imports by the country especially for non-essential goods.

Malaysia exports of oleochemicals to Egypt by product breakdown in 2020
Products Volume /Tonnes
 SOAP NOODLES / STOCK / BLEND 19,855
 PURIFIED / REFINED / DISTILL GLYCERINE / GRD GLYCERINE 4,138
 STEARIC ACID / STEARIC ACID FLAKES 2,867
 TRIPLE PRESSED STEARIC ACID 2,491
OTHER PRODUCTS 7,014
TOTAL 36,365

Source: MPOB Statistics

Source: MPOB Statistics

Market Potentials

The oleochemical market is promising and growing in different market segments. For instance, soap market in Egypt registered a positive compound annual growth rate (CAGR) of 14.29% during the period 2013 to 2018 with a sales value of EGP 989.85 Million in 2018, an increase of 17.59% over 2017. The market achieved its strongest performance in 2018, when it grew by 17.59% over its previous year. In 2018, bar soap market accounted for a major share of 91.53%, while Liquid Soap represented 8.47% of the market’s 2018 share.

In light of COVID-19, consumers in Egypt have either shifted spending to focus on everyday commodities or essentials such as food, or are using homemade solutions instead of retail offerings. Low purchasing power has resulted in increased purchases of mass beauty products, or products with natural ingredients (especially hair and skin products) due to fears related to visiting salons, even as lockdown restrictions ease. Beauty and personal care products in Egypt started picking up again in volume terms in 2019, especially in the second half of the year, following two difficult years. This was due to the price stability created by the overall increase in economic stability and the rise of foreign reserves, which in turn led to a decrease in US dollar exchange rate. In terms of distribution, COVID-19 has resulted in a surge in online purchases. As well as the channel’s convenience and price competitiveness, online purchases mean consumers do not have to visit bricks and mortar outlets, thereby reducing the risk of infection. Beauty and personal care are expected to witness a slight rise over the forecast period due to decreased inflation. Continuous promotions are expected, such as free samples, coupled with an increase in the number of outlets as the country recovered from the impact of COVID-19.

The paints & coatings market was valued at $2.2 billion in 2019, and is projected to reach $3.6 billion by 2027, growing at a CAGR of 7.9% from 2020 to 2027. Rise in demand for paints & coatings products from the building & construction industry from the region is expected to fuel the growth of the market during the forecast period. Lockdown imposed due to outbreak of the COVID-19 pandemic has resulted in temporary ban on the import and export; thereby, disrupting the supply chain and hampering the paints & coatings market growth in the second and third quarter of 2020. However, the market is expected to recover in the late year or by the first quarter of 2021 as the demand and production of paints & coatings products restarts. 

This article is based on a data obtained from Trend Economy Portal, Allied Market Research, and Global Data Report.

Prepared by Lamyaa El Enany

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