Market
Intelligence
February 2016
Orange
Lemon
Organic Bergamot
The orange oil market remains very
firm as we await offers for new crop
Florida Valencia oil, expected to be at
an all-time high.
The 2016 Argentinian crop, which will
start next month, is forecast to be
circa 15% higher than the 2015 crop.
Following the conventional market the
situation for organic oil this season is
very bleak and accounts for less than
20% of the total bergamot market.
www.treatt.com
In this issue
4 - Citrus oils
8 - Essential Oils
10 - Organic Update
Vegetable Oils
Essential Oils
12 - Aroma Chemicals
14 - Specialty Chemicals
16 - Nature Identical Essential Oils
18 - Earthoil
2
Welcome
The volatility that marred the second half of 2015 has
continued unabated into the New Year. We will likely be talking
of another year with very few markets moving in line with
conventional expectation as the dynamics behind this
unpredictability are driven by such a diverse range of factors.
The effects of severe movements in raw
material and energy costs, currency
rates, extraordinary weather conditions
and whims of Production Planners
restricting supply will, in cases, be
negated but in others may have a very
pronounced effect.
Whilst there is continued growth in the
global F&F, consumer goods and
cosmetics sectors presenting a positive
outlook, the ongoing variability in market
conditions will mean straightforward
business at any point in the supply chain
will be hard to find.
www.treatt.com
Citrus Oils
4
Orange
The orange oil market remains very
firm as we await offers for new crop
Florida Valencia oil which, are
expected to be at all-time high
prices. Orange terpenes and
D’Limonene have also climbed to
near
historically
high
levels,
particularly in the first few weeks of
the New Year.
Prices for both in Europe are
particularly bullish and expected to
remain so at least until August when
2016 crop Brazilian oil starts to hit
the shores. As prices have risen and
financial risk has grown, stockists’
appetite for that risk, the world over,
has at least reduced if not completely
gone and Europe is no exception.
The last time the orange market
reached the price levels they are
today was in 2011, when a series of
factors collided creating a very
chaotic environment.
Today, causes for price increases
are much more easily explainable –
simple cause and effect of supply
and demand. With a heavily reduced
crop in Brazil and the smallest Florida
crop in almost 50 years, there is
simply not enough orange oil or
limonene to fulfill standard worldwide
demand. Florida’s orange crop alone
has been reduced by more than 48%
since 2012/2013 and is wreaking
havoc on these markets. Adding fuel
to the fire is a degree of panic buying,
particularly on the limonene side of
the business.
We have recommended that
customers should cover their oil
needs for the next 6 months but
would not go out further than that
until we have news of the 2016
Brazilian crop which, hopefully, will
give some clarity and stability.
Argentina, we could see prices for oil
remain quite stable, or even firm, over
the next year. There certainly is a lack
of good quality oil at origin currently.
We will be watching this market
closely in the next couple of months.
Lemon
The 2016 Argentinian crop, which will
start next month, is forecast to be
around 15% higher than the 2015
crop, producing some 1750K tons of
fruit (compared to just under 1500
tons last year). However, fresh fruit
exports are also expected to be
greater so fruit available for
processing could be 10% higher for
2016 at most. Spain’s crop is heavily
down from 2015 with expectation of
processing only 100K tons of fruit.
The price for lemons in both Sicily
and Spain is very high at the
moment, also fuelled by a 25+%
reduction in crop.
Due to many European lemon
processors being behind on their
juice contracts, they have been
forced to buy fruit to run through their
factories but the high prices are
certainly making the decision a
difficult one. South Africa and the US
are also expecting reduced crops,
mostly due to drought, and Turkey is
experiencing conditions similar to that
in Spain and Italy with the same
effects. We have all been waiting for
lower lemon oil prices, however, with
worldwide crop shortages, except in
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Citrus Oils
6
Distilled Lime
This market has been somewhat
subdued over the last few months.
The 2nd surge of fruit in Mexico
was delayed by heavy rains in
late
October/early
November
(predominantly caused by hurricane
Patricia), and prices for industrial
limes are up 35% from November to
January and continue to rise.
the grapefruit crop due to citrus
disease, particularly greening, which
has been a significant contributor to
a 41% reduction in Florida grapefruit
production since the 2012/2013
season.
new trees. As the amount of
mandarin oil produced declines we
expect to see a rise in prices.
We have welcomed stability for all
tangerine variety oils as well as
Persian and Tahitian expressed lime
oils. Blood orange oil has risen
slightly at origin but with the
strengthening of the US dollar, cost
is very similar to that in 2015.
The crop in Peru is similar to last year
though there remain concerns over
the impact of this year’s El Niño. This
market is likely to remain stable in the
mid-term.
Every year we hear about the decline
in the grapefruit juice demand. Now,
we have heard that in the last few
months, the global demand for juice
has surpassed the supply of fruit
available to generate it.
Expect to pay premium prices as
good quality, high nootkatone
material is becoming very difficult to
source.
Bergamot
Higher than average temperatures
and lack of rain in Reggio Calabria,
Italy, has resulted in a later crop,
limited amounts of fruit and very poor
yields. It is feared that the season will
be very short and may almost be
over with production volumes at least
40% down on last year. With 2015
providing less than typical production
the lack of carry-over has resulted in
a serious absence of oil being offered
and prices are starting to reflect this.
Mandarin
The warm, dry conditions in Italy
contributing to the ongoing problems
with bergamot are affecting
mandarins in the same way.
However, another factor in reduced
mandarin
fruit
availability
is
incessantly increasing costs to
harvest and cultivate the fields which
is hindering growers from planting
Grapefruit
Florida is in the middle of an El Niño
winter which is bringing very wet and
cold weather with increased chances
of tornadoes. These conditions do
not bode well for citrus groves. We
are also facing drastic reductions to
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Essential Oils
Cassia Chinese
The autumn crop from both
Guangdong and Guangxi province,
which is currently in progress, is said
to be much lower than that of the
previous year. The price for leaves
and branches has increased but it is
the reduced volumes of raw material
harvested combined with the
continual increase in factory running
costs that will be the cause of higher
prices for the oil as demand
becomes greater than supply.
Geranium Chinese
Demand for pure Chinese geranium oil
has been driven down by the high
prices seen in recent years, with figures
showing that exports out of China
almost halved from 2014 to 2015. This
has resulted in reduced production and
an expectation of lower quality oil.
Prices are set to remain stable until the
new
harvest
which
usually
commences around April.
8
Eucalyptus and
Eucalyptol Chinese
It seems that a number of issues are
combining to encourage the recent
firm prices we are seeing. Adverse
weather conditions in the Yunnan
province, which is the main growing
area for this product, ever increasing
demand and pre-Chinese New Year
speculation being some of the major
contributing factors. We do not
expect to see prices softening in the
near future and are more likely to see
the opposite with currency being the
only moderator in a buyers favour.
seeds has spread to a further 10% of
the pods, resulting in a drop in overall
oil yields.
then the current situation remains
precarious as any large spike in
demand may prompt firmer prices.
India - The recent harvest has also
had a yoyo effect on prices of seeds
from this origin and with the season
drawing to an end, prices are
expected to bounce back in the near
future and remain firm until the next
harvest.
Petitgrain
Paraguay
El Niño really has taken its toll on
this product. Availability remains
extremely low with buyers queuing
up for allocation regardless of the
steadily increasing price. It seems
unlikely that there will be any relief in
the short or medium term as, even if
supply conditions were to improve, it
would take a long time to satisfy the
backlog of demand.
Cardamom
Guatemala - The recent harvest has
caused the usual waves of volatility
with seed prices changing almost
daily but thankfully, this seems to
have stabilised for now. Volumes of
this recent harvest are yet to be
confirmed but are expected to be
around the same as last year which
was around 30-32mt. This being
said, the ongoing impact of the
Thrips pest on the quality of the
Nutmeg
Indonesian
Recent low market prices and the
ongoing wet season at origin have
resulted in collectors and processors
reluctant to do the necessary for
production of this oil to even meet
current commitments. The situation
is expected to continue until at least
March when the weather conditions
improve allowing easier collection
and drying of raw materials. Until
www.treatt.com
Organic Vegetable Oils
Evening Primrose
Pomegranate
Sesame
The price of evening primrose oil is at
a historic high right now and that
trend is set to continue well into 2016.
Poor harvests in China and increased
demand for this highly-sought after
oil, mainly used in health-food
supplements as well as cosmetics,
has led to soaring prices. There is oil
available on the market but be sure to
cover your requirements for 2016
whilst you can.
The harvest in one of the main
production areas, Turkey, has
finished, the seeds have been
carefully separated, cleaned and
dried before being packed into bags
and shipped to our pressing facility in
Kenya. We’re expecting another year
of high-quality oil at a stable price,
which will be available in Europe in a
few weeks. Contact us now for
samples from the new harvest.
The beginning of the calendar year is
a good time to be looking at your
yearly requirements for sesame oil.
Pricing has remained stable from last
year and there is plenty of availability
in Europe, whether you require crude
or refined oil. Why not increase your
market impact and reassure
customers by switching to Earthoil’s
fully traceable, organic and Fair For
Life certified oil.
10
Organic Essential Oils
Lemon
Blood Orange
Bergamot
A lack of rain and high temperatures
in recent weeks has led to an
expectation that organic lemon oil
production in Spain will be reduced
this season by around 30%. The
quality of fruit is reported as very
good however, resulting in the fresh
fruit market willing to pay good prices,
further reducing the volume of raw
material going for processing. The
Italian forecasts are also looking low.
Dry weather during November and
December resulted in very small fruit
and while the number of lemons on
the trees looks healthy, the yield is
expected to be drastically reduced
and the season expected to be
completed by April instead of June.
Yet another fruit harvest adversely
affected by weather conditions in
Italy as without any cold weather the
anthocyanins that are responsible for
the red colour have not been able to
develop and so the colour is
completely lacking. The market price
though remains stable.
Following the conventional market,
the situation for organic oil this
season is very bleak. Production of
organic certified oil accounts for
less than 20% of the total bergamot
market and we expect that demand
will continue to far outweigh supply
this year.
www.treatt.com
Aroma Chemicals
Crude oil prices are continuing to fall with Brent crude now trading below $35.00
per barrel. Furthermore, the removal of international sanctions on Iran is opening
the market up to yet further supply in an already saturated market. This could be
good news for buyers of materials derived from petrochemical sources.
This should also provide manufacturers with some respite on their energy as well
as other indirect manufacturing costs. However, it remains to be seen exactly
what the impact will be product to product and what the lag will be between
media headlines and real market prices.
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Jan 01, 2016
Dec 01, 2015
Nov 01, 2015
Oct 01, 2015
Sep 01, 2015
Aug 01, 2015
Jul 01, 2015
Jun 01, 2015
May 01, 2015
Apr 01, 2015
Mar 01, 2015
Feb 01, 2015
Jan 01, 2015
Dec 01, 2014
Nov 01, 2014
Oct 01, 2014
Sep 01, 2014
Aug 01, 2014
Jul 01, 2014
Jun 01, 2014
May 01, 2014
Apr 01, 2014
Mar 01, 2014
20
0
Vanillin
Availability has improved with the
opening of a new factory in Jiangsu
province. It is reassuring to note that
despite the turmoil in economic
conditions there is still incentive
enough to fill a supply vacuum.
6.5
6.4
6.3
6.2
6.1
Jan 16
Dec 15
Nov 15
Oct 15
Sep 15
6
Aug 15
Pricing remains relatively stable for
this range of materials except
Octanoic acid which continues to rise
The Gum Turpentine market remains
weak and allied with the weakness
being experienced in petrochemical
feedstocks, there is every reason for
us to see the price of most aroma
chemicals follow the same trend in
the coming months. In fact the price
for Gum Turpentine is actually half of
that seen 2 years ago with prices
steadily moving over that period.
However, this means we would not
expect to see a major correction to
materials such as Terpineol, IBA,
Borneol or their derivatives.
Jul 15
Fatty Acids
Gum Rosin
6.6
Jun 15
Due to the continued efforts to
reduce pollution issues in China there
is now only one factory producing.
Pricing is increasing accordingly at
the same time as supply is restricted.
May 15
Musk Ketone
Apr 15
The biggest manufacturing facility in
China has reopened following an
enforced
relocation
due
to
Governmental land redevelopment.
The plant can produce approximately
15 tons per month which has
improved supply.
The RMB continues to devalue and
has done so by about 5% during the
past 3 months adding further pressure
on Chinese manufacturers and
exporters to lower prices. It should be
remembered, however, that the same
circumstances make materials being
sold into China (raw materials for
production in some cases) more
expensive (see chart below).
Mar 15
Methylcyclopentolone
RMB Devalued
Feb 15
As reported back in September the
situation with citral derivatives still
remains a problem with no end in
sight. Products affected are such
industry staples as Geraniol,
Hydroxycitronellal, Citronellyl acetate,
Citronellol to name a few. Due to the
volumes concerned there are very
few alternatives for a large customer
base to approach and we actively
discourage panic buying as this will
only exacerbate the problem.
in line with material availability (Palm oil)
problems. The amount of C8 and C10
obtained from the manufacturing
process is much smaller than the
C12/C14.
Due
to
concerns
surrounding the current global
demand situation of palm oil
derivatives, especially C12/C14,
processing has decreased. With
demand outstripping supply of
C8/C10 derivatives, the market has
become very tight and has caused
pricing to increase.
Jan 15
Citral Derived
Products
www.treatt.com
Specialty Chemicals
14
With the Summer Olympics in Rio fast approaching, the
consumer interest in tropical beverages is set to peak in the
coming months. High Impact Aroma Chemicals are very useful
for adding that final sulphurous top note to tropical flavour
applications.
3-Acetylthiohexyl Acetate
Ethyl-3-(methylthio)butyrate
Fema 3816, Cas 136954-25-1
Buchu-like catty aroma suitable for mango, papaya, guava
and passion fruit flavours at 1ppm.
Fema 3836, Cas 233665-96-8
Over-ripe tropical fruit aroma perfect for mango and kiwi
flavours at levels up to 2ppm.
p-Mentha-8-thiol-3-One
3-Mercaptohexyl Hexanoate
Fema 3177, Cas 38462-22-5
Blackcurrant tropical aroma used in tropical fruit flavours at
levels up to 1ppm.
Fema 3853, Cas 136954-22-8
Ideal for passion fruit and other tropical flavours for its
strong guava-like notes.
3-Mercaptohexyl Acetate
Ethyl-2-mercaptopropionate
Fema 3851, Cas 136954-20-6
Used in passion fruit flavours for its characteristic profile at
levels of 0.5ppm.
Fema 3279, Cas 19788-49-9
Powerful alliaceous green tropical notes suitable for
over-ripe durian and mango flavours.
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Nature Identical Essential Oils
In recent times obtaining essential oils from their natural source has become
increasingly challenging. This is due to various factors, one of which being the
decline in availability of several key raw materials. The 2013-2015 seasons have
given rise to some of the most volatile markets in the history of citrus oils.[1] The
United States department of agriculture recently revised their orange crop
forecast down by 8% and we saw record prices for lemon, distilled lime,
expressed lime and tangerine[2]. Coupled with the fact that obtaining raw materials
with the purpose of using them for oils is not usually the primary reason for their
purchase, this makes for a very volatile price landscape.
Around 75% of global citrus crop is consumed as fresh fruit. Any decrease in the
fresh fruit crop has a profound effect on availability and price of these citrus oils.
Demand is high for citrus flavours in the beverages and dairy sectors. In fact,
these two sectors accounted for 62% of the citrus market in terms of value in
2015. Orange, lemon, lime and grapefruit are some of the major citrus flavours
used in end-use industries across the globe, orange being the most popular.[5]
16
[1]
[2]
[3]
[4]
[5]
http://treatt.com/documents/market-intelligence/sep2015/index.html#p=5
http://treatt.com/documents/market-intelligence/dec2015/index.html#p=4
http://www.africaneconomicoutlook.org/fileadmin/uploads/aeo/2015/PDF_Chapters/Overview_AEO2015_EN-web.pdf
http://www.imf.org/external/pubs/ft/reo/2015/apd/eng/pdf/areo0415exesum.pdf
http://www.europlat.org/citrus-flavors-market-trends-analysis-and-forecast-2015-2025.htm
Our Solutions
To combat the increasingly volatile and unpredictable raw material markets, Treatt
has combined its in-depth knowledge of essential oils with its innovative skills
to develop two unique ranges of Nature Identical essential oils. The Simplus
range, which imitate their pure and natural counterparts and the Apphia range,
which possess enhanced flavour properties as well as varied flavour profiles.
Simplus Range
Product Highlight
Products in this range are produced
using synthetic ingredients and have
been carefully crafted to behave,
perform and look like the pure
materials found in nature. The main
purpose of this range is to offer our
customers Nature Identical (NI)
alternatives to pure essential oils,
especially citrus. These products can
be solely used for their flavour
properties, but can also be used as
building blocks for further flavour
formulation and hence offer our
customers an off the shelf flavour
base solution. As part of this range
we also offer NI alternatives to folded
oils, especially Orange, Grapefruit
and Lemon with others being
developed as demand requires.
Orange oil 5 fold and 10 fold NI
Both of these products have been
formulated to exactly mimic 5 fold
and 10 fold pure orange essential oils
and their performance. In application
they are used in the same way as
pure essential oils with the same
dose rates. 5 fold materials would
normally be dosed at around 10ppm
and 10 fold at 4 ppm, but different
applications will have different
requirements. Both of the products
have much fewer wax issues than
would be expected in pure essential
oils and hence decrease any need for
filtration.
Due to their synthetic origin, these
products do not encounter many of
the
problems
their
natural
counterparts do, amongst the most
important being price volatility and
availability. As a result we are able to
offer them at a lower price than
naturals and with a price stability
which allows us to enter markets
such as Africa and Asia which may
not have been able to cope with the
volatile prices of the naturals. This
comes at perfect timing as the
African and Asian markets continue
to experience economic growth
[3] & [4]
.
Products in this range are again
produced using synthetic ingredients
and have been crafted to behave and
perform like pure essential oils but
their flavour properties have been
modified to produce varied flavour
and aroma profiles.
Apphia Range
products are again nature identical
the span for creativity is vast and
products are being developed mainly
to fulfil customer briefs for their
specific application.
Product Highlights
Orange oil Primera
This high impact flavour ingredient
can be used in beverage, ice-lollies
and general confectionary application,
but these uses are not exclusive.
It has a powerfully fruity, full bodied,
juicy aroma with light peel notes
accompanied by slight floral
characteristics.
Lime oil distilled
This flavour oil is more of a ‘fantasy
type’ lime oil NI. The dry lime flavour
is combined with sweet pine and
cardboard notes. The aroma and top
notes however remain delicate, light
and fruity. When tasting this product
the consumer is given a strong
reminder of one of the all-time
childhood favourite sweets - citrus
gummy bears.
Many of them have more of a
‘fantasy’ type flavour top note which
means that generally the flavour is
still very much recognisable but the
top note of the flavour has been
finished to further satisfy consumers
imagination, rather than what nature
would normally offer. As these
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Earthoil
What’s been happening at Earthoil Africa?
New cold press machine
We are delighted to share that Earthoil have made
considerable investment into a new cold press
machine in our Kenyan Facility. The objective of the
investment was to increase capacity in order to meet
growing demand for cold pressed oils. Earthoil Africa
capabilities are a key part of Earthoils growth strategy.
Installation of the new Major Max is complete. Safe
practices were strictly enforced and installation was
planned so that production on the existing Major Max
was not disrupted. The new machine has created 11
new jobs. We plan to produce several oils on the
machine including vegetable oils such as macadamia,
moringa, almond and sesame with a working
schedule 24hrs/7 days a week. The machine is
currently producing conventional macadamia oil. It is
hoped it will improve our production volumes by 40%.
18
www.earthoil.com
Tea tree project update
Earthoil’s commitment to its tea tree project continues with a massive
investment in seedlings, an increase in the number of local farmers in
the producer group and the installation of a second still to produce
top quality, organic fair trade oil. We anticipate being able to
accommodate new customer requirements in the months ahead as
the scale up bears fruit.
Earthoil pays a Fair Trade Development Premium not just for the tea
tree bought from our contracted farmers but also for the tea tree grown
on our own plantations. This Fair Trade premium is then administered
by Earthoil workers in the Plantation and the Distillation unit near
Nanyuki. So far the Earthoil workers have spent the premium on the
following projects:
Lynnet Waithera Kuria
• Scholarship for two children to attend primary school and
secondary school, respectively. One of the supported children,
Lynnet, is the daughter of a former Earthoil worker who sadly
died two years ago in a car accident. This showing a great deal
of compassion and demonstrating the sense of “family” among
the Earthoil workers. The other child, Catherine, was selected by
the Earthoil workers from the community where they live and has
no relationship with the workers families.
• Courses for five Earthoil employees to get additional skills
including gaining a driving license and computer literacy.
They also have other projects in mind such as buying equipment for local
schools or repairing a damaged bridge, which the children have to cross
every day in one of the areas nearby. We will keep you updated during
2016 as they develop.
Catherine Wairimu
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For more information on all our products
and services please visit our website.
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