Raw Materials Price Trend

September 2022


CLOVE DERIVATIVES

Looking at the rainfall forecast of BMKG, the Indonesian Meteorological Agency, for the coming three months, September, October and November, we can already see that these months are predicted to be wetter than normal, with 50% of Indonesia forecasted to have above normal rainfall in October and November. Thus far Indonesia has not experienced any meaningful dry period and as a result, distillation yields of clove leaves remain at a modest 2%, which limits the quantity of clove leaf oil that comes into the supply chain for producers of natural clove derivatives. 

Although slower demand in July and August have balances out demand and supply of clove leaf for now, we do not expect this to last. Already now we see many of our customers come back into the market, putting pressure on the supply chain of clove derivatives. 

We expect this pick up in demand to continue, as we approach Q4 of this year,  with customers rushing to get products from Indonesia in their respective warehouses  at destination on time. 

ESSENTIAL OILS

Starting in May and accelerating in June, we saw a significant price increase of Patchouli crude of approximately 8%. 

It now looks like this price increase was short lived and artificial in nature. Over the past month, prices have come down a few percentage points and  we believe will find their new equilibrium at pre- May levels. 

Availability of good quality raw material for the production of Nutmeg Oil remains low. This continues to put upward pressure on  prices that already increase more than 20% since January this year.  Although new harvest is expected to start in September, the additional quantity coming into the supply chain, may not be sufficient to fulfill pent up demand for the product.  

Prices of Citronella Oil and Clove Bud Oil (CBO), on the other hand, have remained stable.


Inflation Rate Indonesia Quickened
July 2022