Europe tallow stearic spot rises €100/t above Q4

17 October 2007 16:28  [Source: ICIS news]

By Heidi Finch

LONDON (ICIS news)--European tallow stearic spot prices have risen to around €900/tonne ($1,268/tonne), at least €100/tonne higher than fourth-quarter contract levels, on strong demand and upstream tallow fat supply pressure, sellers said on Wednesday.

One seller said it had concluded a few tallow stearic trades for limited quantities at €900/tonne FD (free delivered) NWE (northwest Europe) but had since withdrawn from the tallow stearic spot market due to delayed feedstock deliveries and was concentrating on its contractual obligations.

Another seller pegged tallow stearic spot prices for fully hydrogenated product at around €900/tonne FD NWE, based on the fact that it had already sold one truck of another grade at slightly above this level, stating that upstream limitations were putting pressure on all tallow stearic grades.

Tallow stearic business for the fourth quarter and the early first quarter of 2008 was reported slightly below €900/tonne FD NWE by one producer, noting that it was not surprised that spot business had already reached higher levels based on current raw material costs.

Tallow spot supplies were reported to be practically non-existent, following the strong pull from the derivative oleochemical industry, offset against already tight supply.

Some tallow fatty acid market players were not yet fully covered for the fourth quarter and this had put had further pressure on the tallow fat spot market.

The high prices of its vegetable oil competition also provided tallow fat suppliers with additional leverage to increase spot prices, said some sources.

All these factors were seen to be responsible for pushing tallow fat spot prices up to around €600/tonne FD NWE, at least €40/tonne higher than fourth-quarter contract levels, according to fatty acid players.

Fourth-quarter fully hydrogenated tallow stearic prices were assessed at €750-800/tonne FD NWE, according to global chemical market intelligence service ICIS pricing, representing hikes of €70-80/tonne from the third quarter.

Buyers were unable to confirm that tallow stearic spot business had reached the €900/tonne mark.

A few customers said they were aware that there was additional upstream pressure but were not convinced that this had been translated into tallow stearic spot prices as high as €900/tonne FD NWE.

However, some conceded that they were not active in the spot market at present and were not fully up-to-date with current levels. Other buyers were unavailable to comment.

One seller said it was unable to confirm any tallow stearic spot business at €900/tonne FD NWE, considering that this level better reflected in targets for the first quarter of 2008.

There were no reports of any tallow oleic spot trades this week. However, one supplier said that it was also likely that tallow oleic would trade above fourth-quarter contract levels, noting that it was also affected by the same feedstock constraints as its tallow stearic counterpart.

Distilled tallow oleic prices were assessed €50/tonne higher in the fourth quarter, with levels of €900-950/tonne FD NWE.

Looking to the first quarter, several fatty alcohol players were hopeful that the few thousand tonnes of tallow fat imports from South America expected in November would help to ease the supply situation in Europe and provide them with additional bargaining power in first-quarter discussions.

Some fatty acid market players are Oleon, Undesa, Uniquema, Cognis and Degussa. Fatty acids find outlets in several sectors including the surfactant, food, lubricants and plastics industries.

($1 = €0.71)

By: Heidi Finch
+44 20 8652 3214

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