MARKET OVERVIEW

Palm Fatty Acid Distillate (PFAD) Market size was valued at USD 12.4 billion in 2025 and is projected to reach USD 19.7 billion by 2033, growing at a CAGR of 6.1% during the forecast period. PFAD is a by-product of the palm oil refining process and is increasingly used across a range of industries, including oleochemicals, animal feed, biodiesel, and soap manufacturing. The market is growing due to the rising demand for sustainable and cost-effective feedstocks for biofuels, especially in regions emphasizing renewable energy adoption. In addition, PFAD’s affordability and availability compared to other fatty acids make it a favorable choice for industrial applications. Governments in Europe and Asia are promoting PFAD-based biodiesel as part of their clean energy policies, which is further expanding its market scope. The versatility of PFAD in chemical industries, its increasing use in detergents and cosmetics, and its role as an animal fat substitute in feed contribute to sustained demand globally.

DRIVER:-

One of the major drivers of the PFAD market is the growing demand for bio-based fuels and oleochemicals. With global emphasis on reducing carbon emissions, PFAD is being extensively utilized as a key feedstock for biodiesel production, especially in the EU, the U.S., and Southeast Asia. Biodiesel manufacturers prefer PFAD due to its low cost and renewable nature, helping meet sustainable energy goals. According to recent estimates, biodiesel production using PFAD has increased by over 30% between 2020 and 2025. Additionally, PFAD is used in soaps, candles, animal feed, and lubricants, expanding its demand base. The oleochemical industry sees PFAD as a key input due to its fatty acid profile, which is suitable for surfactants and emulsifiers. Moreover, as regulations tighten around palm oil by-products, the utilization of PFAD in sustainable and circular economy models is rising.

COUNTRY/REGION:-

Indonesia and Malaysia are the dominant producers and exporters of PFAD, accounting for over 85% of global supply in 2025. These countries have a well-established palm oil refining industry, which naturally results in large-scale PFAD production. PFAD exports from Indonesia alone reached nearly 4.2 million metric tons in 2025. In terms of consumption, Europe leads the demand due to its strong biodiesel sector and environmental policies that promote the use of waste-based feedstocks. The Netherlands, Germany, and Spain are significant importers of PFAD for biodiesel blending. In India and China, PFAD is predominantly used in animal feed and soap manufacturing. These countries are witnessing increasing imports due to growing demand for affordable fatty acid inputs. The United States is also emerging as a potential PFAD consumer, driven by its expanding renewable diesel sector and efforts to reduce reliance on petroleum-based fuels.

SEGMENT:-

The PFAD market is segmented based on end-use industry and distribution channel. The biodiesel segment holds the largest share, contributing nearly 48% of total demand in 2025, due to the push for sustainable energy sources. The oleochemical segment follows closely, driven by the growing demand for eco-friendly surfactants, soaps, and personal care products. The animal feed segment is also growing, with PFAD used as a cost-effective energy source in livestock nutrition. By distribution, bulk distribution channels dominate, as industrial consumers prefer large quantities at reduced costs. However, online trading and specialized supply chains are gaining traction, especially among small-scale manufacturers in emerging markets. This segmentation highlights the diverse and expanding use of PFAD across various sectors.

MARKET TRENDS

A major trend shaping the PFAD market is the increased usage of PFAD in advanced biofuels like renewable diesel and sustainable aviation fuel (SAF). As governments prioritize low-carbon energy sources, PFAD is gaining attention due to its waste-based classification, enabling producers to meet regulatory mandates more effectively. Another significant trend is the vertical integration by palm oil refineries, allowing them to convert PFAD into value-added derivatives like stearic acid, palmitic acid, and glycerin. The cosmetic and personal care industry is also embracing PFAD-based ingredients due to their emollient and cleansing properties. Moreover, with ESG (Environmental, Social, Governance) goals gaining momentum, companies are increasingly investing in traceable and certified PFAD sourcing, promoting sustainable practices in palm supply chains. Technological advancements in refining and extraction are further optimizing PFAD recovery, enhancing yield and quality. The growing interest in circular bioeconomy models is also driving research on revalorizing PFAD from waste to high-value bio-based products.

MARKET DYNAMICS

DRIVER-

The push for clean and renewable energy is significantly driving PFAD demand, especially as biodiesel and renewable diesel feedstock in Europe, Indonesia, and the U.S.

RESTRAINT-

Sustainability concerns and environmental scrutiny around palm oil production can restrict PFAD supply and trade, particularly in markets with strong deforestation laws and sourcing standards.

OPPORTUNITY-

Emerging applications in cosmetics, pharmaceuticals, and green chemicals are creating new revenue channels for PFAD, supported by innovation in oleochemical derivatives.

CHALLENGE-

The volatile pricing of palm oil and its by-products, including PFAD, affects profit margins and cost stability for downstream processors and traders.

MARKET SEGMENTATION

By Type-

PFAD is categorized into crude PFAD and refined PFAD. Crude PFAD dominates the market with nearly 70% share, primarily used in biodiesel and feed. Refined PFAD, with enhanced purity and controlled FFA content, is gaining traction in cosmetics and pharmaceutical sectors.

By Application-

The biodiesel application leads the PFAD market due to the growing focus on decarbonization. The soap and detergent industry follows as PFAD remains a key ingredient in bar soaps. Animal feed and oleochemicals are also key segments driving significant volume.

REGIONAL OUTLOOK

North America-

Rising use of renewable diesel in the U.S. and Canada is increasing PFAD imports. California’s LCFS and federal incentives are accelerating its adoption in fuel blending.

Europe-

The largest consumer of PFAD for biodiesel production, with strong regulations promoting waste-based fuels. Germany and the Netherlands are key importers.

Asia-Pacific-

Home to the largest PFAD producers—Indonesia and Malaysia. Demand is growing in India and China for soap, feed, and low-cost oleochemicals.

Middle East & Africa-

Emerging market with gradual uptake in animal feed and industrial uses. Some countries like South Africa are exploring biodiesel potential using PFAD.

List of Top PFAD Companies-

1. Wilmar International Ltd. – A major producer and exporter of PFAD with a wide refining network in Asia.

2. Musim Mas Group – Offers sustainable PFAD products with global distribution.

3. Cargill Inc. – Trades PFAD for both oleochemicals and biofuels in North America and Europe.

4. IOI Corporation Berhad – Supplies PFAD as part of its integrated palm oil business.

5. KLK Oleo (Kuala Lumpur Kepong) – A leading player in PFAD-based oleochemicals.

6. Apical Group Ltd. – Strong presence in biodiesel and PFAD export from Indonesia.

7. BASF SE – Uses PFAD in producing biodegradable surfactants and emulsifiers.

8. Emery Oleochemicals – Specializes in PFAD derivatives for cosmetics and industrial uses.

9. Neste Corporation – Uses PFAD as a key input in renewable fuel production.

10. Godrej Industries Ltd. – One of India’s key users of PFAD in soap manufacturing.

Investment Analysis and Opportunities-

Investments in PFAD upgrading technologies and refining units are growing, particularly in Asia. Biofuel firms are expanding procurement contracts with Southeast Asian producers to secure long-term PFAD supply. Strategic partnerships and sustainability certifications (RSPO, ISCC) are becoming critical in securing investments.

New Product Development-

Companies are innovating PFAD derivatives such as fatty alcohols, esters, and glycerides for green chemicals and personal care applications. Biotech firms are exploring PFAD-based feedstock for bioplastics and enzymes.

Five Recent Developments-

1. Neste signed long-term PFAD supply contracts with Malaysian refiners (2025).

2. BASF launched PFAD-based biodegradable surfactants for eco-cleaners.

3. Musim Mas introduced RSPO-certified PFAD product lines.

4. Indian soap manufacturers increased PFAD imports amid rising palm oil costs.

5. Cargill expanded PFAD-based biodiesel capacity in its EU facility.

Report Coverage-

This report covers the global PFAD market from 2025 to 2033, including detailed analysis on market size, growth trends, segmentation, regional outlook, leading players, and investment opportunities. Key market dynamics, challenges, sustainability drivers, and innovation trends are explored for actionable insights.