Supply pressures Q2 US detergent alcohols – buyers

10 March 2010 22:38  [Source: ICIS news]

HOUSTON (ICIS news)--Second-quarter US detergent-range fatty alcohol contract prices are being pressured up on supply concerns, buyers said on Wednesday.

Second-quarter contracts remained under negotiation, but buyers and sellers discussed spreads that were likely to settle mostly in the mid-70s cents/lb, based firmly on obtaining secure supply.

First-quarter detergent-range fatty alcohol contracts were assessed in a 62.50-69.50 cent/lb ($1,378-1,532/tonne, €1,020-1,134/tonne) spread, according to global chemical market intelligence service ICIS pricing.

“It’s consistent supply that is a concern,” one fatty alcohol buyer said.

Natural fatty alcohols are derived from vegetable oils, such as coconut oil (CNO) and palm kernel oil (PKO). Synthetic versions of the same alcohols are made via an ethylene route.

Malaysia and the Philippines are home to the majority of natural alcohol production and heavily integrated to coconut and palm plantations. 

The US is a net importer of fatty alcohols, including detergent-range, C12-14 natural and C12-15 alcohols, relying heavily upon Asia for the resource. 

Asian alcohol producers are increasingly able to select different production streams and can choose to sell the vegetable oil feedstocks, mainly coconut oil (CNO) and palm kernel oil (PKO) directly into the global oilseeds markets, sources said.

“They don’t have to make the alcohols, but the US has to have them,” a US buyer said.

Fatty alcohol import suppliers have to negotiate with distant “home offices” that may, or may not, allocate sufficient alcohols into various global regions, sources said.

Consequently, the US alcohol market supply/demand fundamentals can tilt toward demand outstripping supply despite a basic balance in overall global supply factors, sources said.

Domestic US natural fatty alcohol producers include Procter & Gamble and Cognis. Shell Chemical and Sasol are domestic synthetic fatty alcohol producers, with Shell using the ethylene route and Sasol’s chemistry largely a natural gas-based technology.

Importers include Kao of Japan, Ecogreen and KLK, among others.

Procter & Gamble is a multi-national company and the largest global fatty alcohol producer, with production units in Asia and the US.

Detergent-range fatty alcohols are feedstocks for numerous household and industrial cleaning products, covering a broad array of surfactant and lubricant market segments.

($1=€ 0.74)

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By: Judith Taylor
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