Overview
The oleochemical market in the United States is witnessing strong and sustained growth, driven by increasing demand for sustainable and bio-based solutions across multiple sectors. In 2023, the U.S. market was valued at approximately USD 3.4 billion and is projected to grow at a compound annual growth rate (CAGR) of 7.8% through 2030 (Globe News Wire, Grand View Research). Notably, the U.S. accounted for 65.6% of global oleochemical market revenue in 2023, underscoring its central role in the global industry.
Oleochemicals—derived from renewable sources such as vegetable oils and animal fats—are environmentally friendly alternatives to petroleum-based chemicals. They are widely used across various industries, including personal care, food processing, pharmaceuticals, and biodiesel production, due to their biodegradability and low toxicity.
This growing market momentum is being shaped by several key factors that are reinforcing the demand for oleochemicals across diverse applications.
Key Drivers of Growth
1. Transition Toward Sustainability
The shift toward sustainability, supported by evolving regulatory frameworks and growing environmental awareness, is accelerating the adoption of bio-based chemicals. Oleochemicals, derived from palm oil, coconut oil, and animal fats, align with these goals by offering renewable, biodegradable, and non-toxic alternatives. They enable manufacturers to meet stringent regulatory requirements while also addressing consumer demand for eco-friendly and ethically sourced ingredients.
2. Growth in Personal Care and Cosmetics
The personal care and cosmetics sector is a key driver of oleochemical demand. These compounds are used in products such as soaps, shampoos, lotions, creams, and deodorants, owing to their gentle and skin-compatible properties. The rising consumer preference for plant-based, organic, and clean-label formulations is prompting brands to substitute synthetic and petroleum-derived ingredients with oleochemical-based alternatives. Additionally, increasing demand for cruelty-free and vegan products is further supporting this shift.
3. Expanding Industrial Applications
Oleochemicals are increasingly being utilized in industrial applications such as lubricants, coatings, adhesives, surfactants, and agrochemicals. Their chemical stability, lubricity, and biodegradability make them attractive options for companies aiming to reduce their environmental impact. In the agriculture sector, for instance, oleochemical-based emulsifiers are used in pesticide formulations to improve environmental safety without compromising efficacy. These applications are expected to expand as industries seek to lower their carbon footprint and adopt more sustainable production inputs.
4. Growth of the Biodiesel Sector
The U.S. biodiesel industry continues to be a major outlet for oleochemicals, particularly in the form of fatty acid methyl esters (FAME), which are key derivatives used in biodiesel production. In 2023, the country produced approximately 1.7 billion gallons of biodiesel, with FAME derived from feedstocks such as soybean oil, canola oil, and used cooking oils. The use of FAME significantly reduces greenhouse gas emissions compared to conventional diesel, positioning oleochemicals as strategic enablers of the energy transition and a low-carbon future.
Opportunities for Malaysian Palm-Based Oleochemicals
As demand for sustainable oleochemicals continues to grow in the United States, Malaysia is well positioned to strengthen its footprint by addressing market gaps and offering competitive, traceable, and certified alternatives to petrochemical-based products.
Addressing Supply Vulnerabilities in the US Market
Over 60% of the oleochemical raw materials used in the United States are imported, making the market susceptible to disruptions from geopolitical tensions, trade restrictions, and fluctuations in shipping costs (Globe News Wire). This dependency creates a strategic opening for Malaysian exporters to position themselves as stable, long-term suppliers capable of mitigating these risks.
Malaysia’s Competitive Edge
As one of the world’s leading producers of palm-based oleochemicals, Malaysia offers a robust and mature supply chain, delivering consistent volumes of high-quality fatty acids, glycerine, and esters. The country’s commitment to sustainable palm oil production and its adoption of certification schemes such as MSPO (Malaysian Sustainable Palm Oil) further enhance its appeal to U.S. buyers seeking ESG-compliant and traceable sourcing options.
In 2024, Malaysia exported 194,994 metric tonnes of palm-based oleochemicals to the United States, including:
- Purified glycerine (35,896 MT)
- Palmitic acid (23,648 MT)
- Distilled palm oil fatty acid (12,209 MT)
These export figures reflect Malaysia’s established presence and capacity to serve high-demand sectors in the U.S.
Diversifying into High-Value Segments
Beyond traditional applications in personal care and household products, Malaysian oleochemical producers have the opportunity to move up the value chain by expanding into high-margin specialty markets, such as:
- Biolubricants
- Bio-based surfactants
- Specialty esters
Strategic Recommendations for Malaysian Exporters
To fully capitalize on the expanding opportunities in the U.S. oleochemical market, Malaysian exporters should consider the following key actions:
Emphasize ESG and Traceability: Demonstrating adherence to sustainable sourcing practices and transparent supply chains will be vital in meeting the growing expectations of U.S. buyers and regulators.
Explore Emerging Sectors: Tapping into new applications such as renewable energy, biodegradable plastics, and green solvents will help diversify demand and build future-ready market resilience.
Strengthen Market Visibility: Participating in international trade fairs, investing in content-driven marketing, and forming strategic partnerships will be essential to elevate brand recognition and engage with downstream buyers.
Leverage Institutional Support: Engaging with Malaysian trade bodies, chambers, and government agencies can facilitate entry into the U.S. market and provide valuable support in regulatory navigation, trade facilitation, and business matchmaking.
Conclusion
The United States’ increasing demand for bio-based, sustainable chemicals presents a timely and strategic growth opportunity for Malaysia’s palm-based oleochemical industry. Backed by a strong production base, a proven track record of quality exports, and a commitment to sustainability, Malaysia is well positioned to support U.S. industries in their transition away from petrochemicals. By adopting a focused approach—centered on ESG compliance, product diversification, and deeper market engagement—Malaysian exporters can build a durable and influential presence in one of the world’s largest oleochemical markets.
References:
- https://www.globenewswire.com/news-release/2022/06/13/2461660/0/en/Oleochemicals-Market-to-Reach-US-39-689-Million-by-2030-Exclusive-Report-By-Acumen-Research-Consulting.html?
- https://www.grandviewresearch.com/industry-analysis/us-oleochemicals-market-report
Prepared by Nuradibah Razali
