Patchouli oil prices have moved up significantly in recent months. For companies sourcing Indonesian patchouli oil, the increase is becoming difficult to ignore. But what is behind the price movement?
We have been talking about the prolonged dry season in Sulawesi for several months. In our earlier updates, we shared our concerns that the dry conditions could affect patchouli harvests, supply and eventually prices. Now, we are seeing those effects more clearly at the source.
What is happening in Sulawesi?
The prolonged dry season has affected several patchouli-growing areas in Sulawesi. Harvesting has slowed, and the amount of raw material coming into the local supply chain has become limited. This is the first part of the story. When there is less patchouli material available, local distillation naturally slows down. And when fewer distillation centres are running at normal capacity, less patchouli oil comes into the market.
There are also some practical challenges making the situation more difficult. In several producing areas, access to fuel has become more difficult, while power interruptions have caused additional delays to local operations. Individually, these issues may not seem significant. Together, when raw material is already limited, they put further pressure on the supply chain.
Why are prices moving so sharply?
The current price increase is closely connected to the availability of raw material. There is simply less material moving through the supply chain than usual, while demand for Indonesian patchouli oil remains. Existing stocks are therefore becoming more important. Once available oil is committed, replacing it depends on the next round of collection and distillation, which cannot always happen immediately.
The effect is also more noticeable for certain grades. Products such as Iron-Free and Molecular Distillation patchouli oil require additional processing after distillation. When suitable patchouli oil is already limited, replenishing these refined grades can become even more challenging. This is why availability can vary significantly between grades, even within the same patchouli oil market.
What does this mean for the coming months?
From what we are seeing in Sulawesi, we expect supply and price pressure to continue through the end of the year. This is our current view based on conditions close to the source, rather than a fixed forecast. Weather, harvesting and market demand can still change.
For procurement teams, the current situation makes it useful to look beyond the next shipment and review upcoming requirements: current stock, required grades, expected volumes and lead times. It is also worth clarifying whether an offered volume is ready stock or future production, as these can mean very different things in a tight market.
Staying close to the source
The situation is still developing, and we will continue to follow what is happening with farmers, local collection and distillation in Sulawesi. For us, sharing these updates is about giving our partners a clearer picture of what is happening before it reaches the finished-oil market.
For now, the message from the source is fairly clear: raw material remains limited, and the pressure is being felt further along the patchouli oil supply chain.