Palm prices pressure Europe fatty acids

17 September 2008 18:55  [Source: ICIS news]

LONDON (ICIS news)--Ongoing weakness in the palm oil market is putting pressure on fatty acid pricing, and even on tallow based products, buyers and sellers said on Wednesday.

“We hope to maintain prices as far as possible,” said a European producer. “The best solution is a rollover or a slight decrease. At the moment the gap between palm and tallow based stearic acid is around €100/tonne [$141/tonne].”

The discrepancy in pricing between the two product streams was also prompting buyers to consider a switch to palm based material where possible.

“We are trying to use palm fatty acids instead of tallow because it’s more economical, but historically a major part of our purchasing has been tallow material,” said a consumer in the surfactants sector.

“Tallow [fat] is going down, but from very high levels. We are now back at the level seen at the end of June,” the buyer continued, adding that further decreases in the upstream tallow fat market were expected as both renderers and tallow fatty acid producers would not want to lose volume to their Asian counterparts.

“If we transfer to palm we could get a €100/tonne decrease from our previous tallow price,” the buyer said.

Fully hydrogenated tallow stearic acid was assessed in a €950-980/tonne FD (free delivered)  NWE (northwest Europe) range, compared to €930-1,000/tonne FD NWE for triple pressed palm stearic acid, according to global chemical intelligence service ICIS pricing.

The benchmark crude palm oil (CPO) contract for December delivery traded on the Bursa Malaysia changed hands at ringgit (M$) 2,139/tonne ($620/tonne) on Wednesday, a drop of M$190/tonne week-on-week and a decrease of around (M$) 1,400/tonne since late June when the previous quarterly fatty acid contract was established.

($1 = €0.71) ($1 = M$3.46)

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By: Shelley Kerr
+44 20 8652 3214

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