FocusAsian glycerine prices continue to fall on poor demand

02 April 2009 09:48  [Source: ICIS news]

SINGAPORE (ICIS news)--The downtrend in Asian refined glycerine values is showing few signs of relenting as prices continue to fall due to weak demand from various downstream industries, sellers and traders said on Thursday.

Weak demand was also putting pressure on the negotiation levels of prices, they said.

Prices were assessed $30/tonne (€23/tonne) lower at $600-650/tonne FOB (free on board) SE (southeast) Asia during the week to Wednesday, reflecting fixtures and price discussions, according to global chemical market intelligence service ICIS pricing.

Some oleochemical producers in Malaysia and Indonesia said they attempted to maintain their offers at $650-700/tonne FOB SE Asia in a bid to prevent any further dip in their profit margins.

In addition, producers said the recent hikes in upstream vegetable oil values have put severe pressure on their profit margins.

But dismal buying interest from end-users due to weak sales of end-products capped buying interest, with few firm bids from end-users reported during the week.

One regional trader pointed out that buyers were mostly delaying purchases as they expect further price slides and hope that producers would dump their material in the coming months as inventory levels build up.

Producers echoed the sentiment, pointing out that market prices had seemingly stagnated.

"I don’t understand why prices should fall. Many plants are running low now, so supply is limited. But there is simply no demand," a marketing official with a Malaysia-based producer said.

Another trader, who had taken position for small lots at $600/tonne FOB SE Asia, said: "I think I made a mistake by buying at that level. I’m afraid that prices are going to fall further."

In contrast, second-quarter contract prices in Europe rose by €120/tonne over the first-quarter levels to €450-490/tonne FD (free delivered) NWE (northwest Europe).

Market players said that the apparent disparity in price movements in the two regions could be attributed to a delayed reaction over the price surge seen in Asia during earlier months.

Major refined glycerine producers in Asia include IOI Oleochemical, Proctor and Gamble, Kuala Lumpur Kepong (KLK) and Musim Mas.

($1 = €0.76)

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By: Jeremiah Chan
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