Europe fatty alcohols buyers accept Q2 increases are likely

17 March 2010 17:34  [Source: ICIS news]

LONDON (ICIS news)--European fatty alcohol prices are likely to increase in the second quarter, buyers said on Wednesday.

In the run-up to negotiations for second-quarter contract settlements, producers have taken a typically bullish stance and claimed that price increases for both C12-14 and C16-18 grades were inevitable.

Somewhat more unusually, several consumers admitted that increases may indeed be unavoidable.

Producers pegged the proposed increases at around €100-150/tonne ($137-205/tonne) for C16-18, while the more-in-demand C12-14 would rise by closer to €150-200/tonne, they said. Buyers considered the lower side of these ranges to be more likely.

The factors behind the expected hikes were both the high prices of palm raw materials and the poor availability of fatty alcohols.

While the primary driver for producers was the cost of raw materials, consumers considered the tight market to be of more pressing concern.

“I fear there is no way around it [the price increases]. There’s lots of demand right now and [fatty alcohols] are very difficult to obtain, unless you have a very good relationship with your supplier,” a consumer said.

The period preceding quarterly contract settlements in the fatty alcohols market is often characterised by an impasse between buyers and sellers, caused largely by strongly increasing raw material prices and the squeeze this puts on margins.

Sellers tend to claim that the cost of feedstocks sets a lower limit to the price at which they can sell the alcohol derivatives, while buyers refuse to accept increases on the basis that end users, generally retailers, control the final prices.

No parties had begun formal discussion yet, and most expected contracts to be settled near the end of March or early April.

Monthly prices for March were generally around €1,150-1,250/tonne FD (free delivered) NWE (northwest Europe) for C12-14, and €950-1,000/tonne for C16-18.

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By: Ross Yeo
+44 208 652 3214

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