“Liberation Day” and Free Trade Agreements
As we move into 2026, the European industry is transitioning from a period of intense crisismanagement toward a new phase of strategic positioning. The EU continues to hold a significant place on the global stage, representing approximately 18.3% of the world’s nominal GDP and acting as the world’s largest trader of goods and services. This economic clout is being leveraged to navigate the complex recovery of industrial demand and the realignment of global trade routes.
1. Castor Oil & India: Resilience Amidst Currency Shifts
The castor market is recalibrating in early 2026 after a turbulent 2025. Last year was characterized by a 20% reduction in crop output and a decline in castor oil exports, which fell approximately 3,5% compared to 2024. While 2025 was marked by a historically weak Indian Rupee (INR), the currency might now be recovering and appreciating.
This appreciation, combined with stabilizing seed prices, is expected to provide a more predictable pricing environment throughout the 2026 season. India has solidified its relationship with major global destinations by signing landmark trade deals with both the USA (lowering the reciprocal tariffs from 50% to 18%) and Europe. This “mother of all deals” with the EU is expected to streamline supply chains, ensuring that raw materials remain competitive despite previous geopolitical volatility.
2. European Industrial Situation and Demand in 2026
The European industrial landscape in 2026 is seeing a cautious recovery, with production projected to grow by 1%–1.5%. While heavy sectors like steel are seeing only modest gains, there is a “manufacturing revival” in high-tech sub-sectors driven by AI adoption, semiconductors, and the transition to a circular economy.
- Trade Dominance: Europe remains a global industrial hub, accounting for 16% of world trade and dominating global service exports at 38.3%.
- Green Energy Transition: Under the Circular Economy Act, the EU is investing €3 billion into critical raw materials to enhance industrial sovereignty. This focus on sustainable, bio-based feedstocks reinforces the long-term importance of castor oil in the chemical industry.
Sector Highlights: Demand for castor derivatives might become robust in other sectors such as personal care and cosmetics, which serve as beacons of growth even when broader industrial output cools.
3. Geopolitical Maturation: Securing the Frontier
The year 2025 will be remembered as the “Year of Tariffs,” a period where world economies suffered from aggressive US trade policies and coercion that pushed nations toward a more united front. Strategic shocks, including the US military intervention in Venezuela and threats to the sovereignty of Greenland, acted as catalysts for European maturity. Forced to step up, the EU has moved to secure its economic future through strategic autonomy and a more autonomous approach to security.
A major milestone in this effort was the signing of the EU-Mercosur Free Trade Deal in January 2026 after 25 years of negotiations. This agreement creates one of the world’s largest free-trade zones, covering 700 million people, and helps diversify trade routes away from volatile markets.
Simultaneously, the India-EU FTA has reshaped the market by providing a stable framework for trade. India has solidified its position as one of the EU’s top 10 trading partners. With the new trade deal, this relationship is expected to grow as India provides critical raw materials to fuel Europe’s manufacturing revival.
These deals signal that the EU is successfully adapting to global protectionism by deepening partnerships with other major powers, ensuring it remains a dominant hub for high-value chemical innovation. The transition from crisis to strategy is on the way of being completed and will have a positive impact on European consumption of castor oil and derivatives.
Adrià De Sans
COFCO International
*The opinions expressed in this newsletter are solely those of the author and do not necessarily reflect the views of The International Castor Oil Association.