Introduction

The Palm Kernel Oil Price Index experienced notable fluctuations across major global markets in Q2 2025, shaped by the interplay of improved supply conditions, varying consumption patterns, and shifts in global trade sentiment. Palm Kernel Oil (PKO), a critical raw material in the food, cosmetics, and oleochemical industries, has faced price pressure stemming from oversupply and cautious downstream demand.

During the second quarter of 2025, major consuming and producing regions—including North America, Asia-Pacific (China), and Europe (Germany)—witnessed a clear downward trend in prices. The global PKO market reflected a combination of ample inventories, high production levels from Southeast Asian producers, and subdued import activities due to weak downstream consumption, particularly in personal care and food manufacturing sectors.

This comprehensive article examines regional movements in the Palm Kernel Oil Price Index, analyzing underlying market dynamics, trade flows, and forecast implications for the coming quarters.

Overview of the Palm Kernel Oil Market

Palm Kernel Oil is derived from the kernel of the oil palm fruit and is distinct from palm oil extracted from the fruit’s flesh. With applications spanning edible oil, surfactants, lubricants, biodiesel, and cosmetics, PKO’s demand is closely tied to both food and non-food industrial sectors.

In Q2 2025, the global PKO market entered a corrective phase after moderate stability in early 2025. The overall Palm Kernel Oil Price Index softened amid easing raw material costs, normalization of palm oil supply chains, and reduced demand for bio-based oleochemicals.

Environmental factors and sustainability certifications continued to influence trade, as buyers in North America and Europe prioritized traceable, RSPO-certified (Roundtable on Sustainable Palm Oil) supplies, further shaping procurement decisions and price trends.

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Palm Kernel Oil Price Index – North America

Price Performance and Market Trend

In North America, the Palm Kernel Oil Price Index witnessed a 7.8% quarter-over-quarter decline in Q2 2025, marking a consistent downward movement compared with the preceding quarter. Prices averaged around USD 1695/MT by the end of June, reflecting softer sentiment across the region.

The decline was largely attributed to improved supply availability from major exporting countries like Malaysia and Indonesia, which eased input cost pressures for domestic refiners and formulators. Furthermore, inventory levels in U.S. ports remained ample, reducing urgency among buyers to secure forward contracts.

Demand Dynamics

Cautious buying behavior among downstream manufacturers played a central role in shaping the Q2 market sentiment. The personal care and homecare sectors, key consumers of PKO derivatives such as fatty alcohols and surfactants, faced reduced output levels amid sluggish retail sales and restrained discretionary spending.

Additionally, the food manufacturing segment showed limited restocking activity, given sufficient inventories accumulated earlier in the year. The overall market reflected bearish undertones, with procurement activity primarily confined to short-term spot purchases.

Supply and Trade Conditions

North American importers benefited from favorable freight rates and improved logistics following the easing of maritime disruptions that had constrained trade in late 2024. The restoration of stable shipping schedules from Asian suppliers, coupled with a decline in crude palm oil (CPO) feedstock costs, contributed to steady inflows of PKO.

U.S. buyers also leveraged favorable currency positions, as a stronger U.S. dollar against the Malaysian ringgit made imports marginally cheaper. However, despite these advantages, the subdued consumption limited overall market momentum.

Market Sentiment and Outlook

The North American PKO market sentiment remained conservative entering Q3 2025. Market participants expect further stabilization in prices, supported by moderate replenishment of downstream inventories and gradual recovery in manufacturing activities.

Nonetheless, the Palm Kernel Oil Price Index in North America is projected to remain under mild pressure, given the absence of strong demand triggers. Buyers are likely to adopt a wait-and-watch approach, particularly as global supply remains ample and cost competition intensifies among exporters.

Palm Kernel Oil Price Index – Asia-Pacific (China)

Price Overview

In China, the Palm Kernel Oil Price Index experienced a pronounced 13% quarter-over-quarter decline during Q2 2025, settling near USD 1551/MT by the end of June. The market exhibited a clear downward trajectory, underpinned by weak domestic demand and abundant stock availability.

As one of the major consumers of PKO in Asia, China’s market is highly sensitive to feedstock and downstream sector performance. The oversupply situation from leading producers, primarily Indonesia and Malaysia, coupled with slower-than-expected recovery in China’s manufacturing output, weighed heavily on prices.

Industrial Consumption and Market Drivers

The decline in PKO prices in China was primarily driven by subdued activity in the oleochemical and surfactant sectors, where PKO is used to produce fatty acids, glycerine, and alcohols. Demand from detergents and cosmetics industries remained limited amid cautious consumer spending and sluggish retail growth.

Moreover, the edible oil segment saw declining consumption levels due to increased reliance on alternative vegetable oils like soybean and sunflower oil, which became more competitively priced during the quarter.

Supply Chain and Export Factors

Southeast Asian exporters increased their shipments to China during the quarter, driven by favorable yields and improved harvesting conditions. As a result, Chinese ports reported higher import volumes, contributing to excess supply in domestic markets.

Additionally, the normalization of freight rates and lower marine insurance costs encouraged bulk buying during April and May. However, downstream utilization remained weak, resulting in stockpiles that exerted downward pressure on spot prices throughout the quarter.

Market Outlook

Heading into Q3 2025, the Chinese PKO market is expected to exhibit moderate stabilization, though without significant upside potential. The industry anticipates that downstream restocking could resume gradually, particularly if prices remain near current low levels.

However, the Palm Kernel Oil Price Index in China is likely to remain constrained by global oversupply and cautious procurement behavior. Traders are expected to continue operating in a low-margin environment unless a sharp rebound in oleochemical exports or domestic consumption occurs.

Palm Kernel Oil Price Index – Europe (Germany)

Quarterly Performance

In Germany, the Palm Kernel Oil Price Index mirrored the trend observed in China and other Asian markets, following a clear downward quarterly trajectory in Q2 2025. Prices declined substantially, settling at softer levels by the end of June, reflecting reduced regional demand and the influence of cheaper Asian imports.

The European PKO market faced persistent weakness as industrial users in the food, chemical, and cosmetics sectors scaled back production amid high energy costs and cautious consumer spending. German importers, closely aligned with broader EU sustainability mandates, also reported slower procurement cycles, prioritizing cost efficiency and traceability.

Demand and Market Drivers

Demand for PKO-based oleochemicals in Germany weakened as manufacturers sought cost-effective alternatives or adjusted production runs to manage inventory and cash flow. The macroeconomic environment, characterized by modest GDP growth and tight credit conditions, further limited industrial expansion.

Additionally, the push for sustainable sourcing—favoring certified palm and palm kernel oil—slowed trading volumes as certification-related premiums added cost pressures. This limited the scope for aggressive restocking despite falling base prices.

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Supply Conditions and Import Trends

Germany continued to rely heavily on imports from Malaysia and Indonesia, with consistent inflows throughout the quarter. The strengthening of the euro against the ringgit and dollar offered some cost relief for European buyers; however, this benefit was offset by weak consumption and excess availability across the region.

Supply chain efficiency improved compared to 2024, with ports operating smoothly and no major logistical disruptions. Despite this, oversupply conditions persisted, keeping the Palm Kernel Oil Price Index in Europe subdued.

Market Outlook

Looking forward, the European PKO market is expected to maintain its soft tone through Q3 2025. Any potential recovery will depend on the rebound of end-user industries such as cosmetics, personal care, and specialty chemicals.

Industry participants anticipate marginal price recovery only if demand from industrial buyers picks up, especially in Western and Central Europe. However, in the absence of substantial consumption growth, the regional Palm Kernel Oil Price Index is projected to hover near current levels.

Comparative Regional Insights

When comparing the three key regions—North America, APAC (China), and Europe (Germany)—the Palm Kernel Oil Price Index in Q2 2025 displayed a globally synchronized downward pattern.

• APAC (China) recorded the steepest decline, with prices falling 13% quarter-on-quarter, driven by excessive supply and stagnant demand.
• North America experienced a moderate 7.8% decline, largely reflecting balanced supply and cautious downstream activity.
• Europe (Germany) followed the APAC trend, with similar price erosion due to import oversupply and constrained consumption.

The overarching theme was one of market correction, driven by improved production levels in Southeast Asia, stable logistics, and muted end-use sector performance.

Key Factors Influencing the Palm Kernel Oil Price Index

1. Global Supply Expansion:
   Favorable weather in Southeast Asia and improved yields significantly increased global PKO availability.
2. Weak Downstream Demand:
   The oleochemical and surfactant sectors—the major consumers of PKO—operated below capacity due to soft global consumption.
3. Currency Movements:
   The strengthening of major importing currencies (USD, EUR) against Asian counterparts reduced import costs, indirectly supporting lower regional price levels.
4. Sustainability Regulations:
   Increasing demand for certified sustainable palm kernel oil added complexity to trade, limiting flexibility for some buyers.
5. Energy and Logistics Costs:
   Lower freight rates and normalized logistics further facilitated imports, enhancing supply-side competitiveness.

Outlook and Forecast for Q3 2025

The Palm Kernel Oil Price Index is expected to remain stable to slightly bearish through Q3 2025. Despite the current price correction phase, market fundamentals suggest limited upside in the near term.

However, if consumption in key downstream sectors such as personal care, food, and oleochemicals strengthens in the latter half of the year, moderate recovery could be seen by Q4 2025. Sustainability mandates, potential biodiesel demand shifts, and currency movements will continue to shape regional trends.

Overall, the Palm Kernel Oil Price Index remains under the influence of global supply-demand equilibrium, with long-term prospects tied to industrial consumption recovery and sustainability-driven trade policies.

Conclusion

The Palm Kernel Oil Price Index in Q2 2025 demonstrated a clear downward adjustment across major regions—North America, APAC (China), and Europe (Germany)—reflecting global oversupply, tempered demand, and cautious industrial sentiment.

While North America experienced a moderate decline of 7.8%, China led the downturn with a sharper 13% drop, followed closely by Germany’s mirrored trend. Moving forward, market participants will closely monitor downstream demand revival and sustainability trends as key determinants of future price direction.

As the global market transitions through this phase of consolidation, the Palm Kernel Oil Price Index serves as a vital benchmark for assessing market stability, trade competitiveness, and the evolving balance between sustainable sourcing and industrial demand.

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