FocusPrice tension mounts for Europe oleochems

05 March 2008 16:10  [Source: ICIS news]

By Heidi Finch

 

LONDON (ICIS news)--Price tension in the European oleochemical market was mounting this week due to increased volatility in the upstream crude palm oil (CPO) market, leading to a stand-off between some buyers and sellers.

 

Earlier in the week, crude palm oil hit several highs, peaking at ringgit (M$) 4,486/tonne EXW (ex works) ($1,411/tonne, €927/tonne) early on Tuesday before dropping sharply to M$ 4,091/tonne at the close.

 

Downward pressure continued on Wednesday with values falling as low as M$3,928/tonne in the afternoon.

 

In the European natural fatty alcohol market, sentiment remained particularly bullish despite the drop as suppliers were determined to recover lost margins. Initial targets for quarter two were pegged between plus €100-200/tonne.

 

One fatty alcohol producer said it would not act in haste, particularly due to recent volatility, and would stick to its original targets for at least the next few days.

 

According to the buy-side it was still too early to discuss firm offers, preferring to continue assessing upstream developments, but one customer said it would not accept increases as high as €200/tonne due to good availability.

 

On the European fatty acid front there was a similar picture, as sellers raised spot and second quarter offers by around €100/tonne at the start of the week following the palm oil highs, but buyers were not prepared to purchase any significant volumes at these levels.

 

As a result a few sources noted a tendency towards more prompt and shorter term contract business, but this was not widely confirmed.

 

Palm stearic offers were mainly pegged above the €1,100/tonne FD (free delivered) NWE (northwest Europe) mark, but prices were also heard up to €1,200/tonne FCA (free carrier).

 

Standard palm oleic was valued in the high €1,100s/tonne FD NWE and palm kernel oil (PKO) oleic in the mid-to-high €1,200s/tonne FD NWE.

 

Demand remained dampened in both the natural fatty alcohol and vegetable fatty acid markets, with some speculation that acid supplies at Rotterdam were verging on the long side. However, this was not widely confirmed.

 

Oleochemical market players include Oleon, Uniqema, Taminco, Stepan and Evonik.

 

For more on fatty acids and fatty alcohols visit ICIS chemical intelligence

 

($1=M$ 3.18/$1=€0.66)

By: Heidi Finch
+44 20 8652 3214

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