31 August 2009 00:00 [Source: ICB]
Fatty acids are largely used in cosmetics and toiletries such as shampoos, liquid detergents, fabric softeners and body lotions. They are also used as lubricants and plasticizers in rubber and polymer processing.
In recent years, global fatty acid demand has increased as a result of end-use consumption growth, as well as strong growth of oleochemicals (fatty acids, fatty alcohol, glycerin).
Demand from US biodiesel producers has been squeezing supplies of fats and greases. In comparison to tallow-based fatty acid producers, which rely heavily on bleachable fancy tallow (BFT) as a main feedstock for the production of acids and certain soaps, biodiesel producers can use a variety of fats and greases. Buyers of certain products, such as yellow grease and BFT, are scrambling to source sufficient and timely volumes.
C18 tallow-based triple-pressed stearic acid (TPSA) prices were unchanged during the week ended August 19. Traders considered the contract range to be high in view of BFT July prices, but agreed tallow values rising into the low-30 cent/lb range were congruent with the spread, according to global market intelligence service ICIS pricing.
Rubber-grade prices in a 48-51 cent/lb spread were also said to be representative for current business. Several fatty acid producers were said to have comfortable inventories of oleic, while others were long on stearic.
Several market participants considered 57-62 cents/lb to be low on the oleic range, while others mentioned placing material at prices under the low end of the spread. The range was considered notional this week due to varying commentary and higher prices in August BFT values.
BFT prices in the Chicago cash markets were hovering at 32 cents/lb on August 19, keeping the August tallow fatty acid feedstock up from July averages. There were no changes in the C16 palmitic range, with Southeast Asia FOB prices in a spread of about 38-40 cents/lb last week, according to ICIS pricing.
Fatty acids are derived primarily from vegetable oils such as palm and coconut oil. Most fatty acid production is in Southeast Asia, particularly Malaysia, Indonesia and the Philippines. Palm oil is the raw material used for fatty acid production in Malaysia and Indonesia, while coconut oil is used in the Philippines.
In North America, fatty acids are produced primarily from tallow fats. The basic acids from this production are the C18 stearic acids. The production process here utilizes BFT for the main feedstock, which is rendered from cattle and hog material after slaughter. Glycerin is a coproduct of fatty acid production.
The use of oil and fat feedstocks instead of petroleum-based feedstocks to make industrial products such as biofuels and plastics is expected to create competition for fatty acids production and/or supply. This in turn may affect pricing, but these applications are largely dependent on crude oil prices and whether it will make cost-effective sense to make the switch, according to SRI Consulting, a global business research firm.
Tax credits and subsidies or environmental legislation are likely to create a competitive advantage for biofuels. The soap and detergent industry competes with biofuels for use of tallow as a raw material.
US FATTY ACIDS PLANT SITES
|Emery Oleochemicals||Cincinatti, Ohio*|
|PMC Biogenix (formerly a Chemtura business)||Memphis, Tennesee*|
|Twin Rivers Technologies||Quincy, Massachusetts*|
|Vantage Oleochemicals||Chicago, Illinois*|
|NOTE: *capacity not available|
|SOURCE: COMPANY WEBSITES AND ICIS|
First profile published for US fatty acids
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