29 April 2010 08:48 [Source: ICIS news]
By Serena Seng
SINGAPORE (ICIS news)--Asian fatty alcohol prices are set to increase in the weeks ahead due to supply shortage, partly caused by surging costs of feedstock crude palm kernel oil (CPKO), market sources said on Thursday.
Prices of CPKO, a derivative of crude palm oil (CPO), had climbed about 24% over the past three months to $1,002/tonne (€762/tonne) FOB (free on board) ?xml:namespace>
Most oleochemical plants in the region were operating at reduced capacity due to high feedstock costs, while some others were shut for maintenance, they said.
Producers were also reluctant to raise output as buying interest was not very strong, market sources said.
“Most buyers were not buying enough cargoes to cover each quarter, but were buying on a need-to basis and this makes it risky for us to run at full operating rates,” said a fatty alcohol producer said.
Fatty alcohols are derived from the high-pressure hydrogenation of natural fatty acids and esters with palm oil as a feedstock. They are used in the cosmetics, personal care, surfactants, lubricants and resins industry.
Prices of feedstock CPKO are largely based on CPO futures contracts, which had risen by Malaysian ringgit M$138/tonne ($43.4/tonne), or 5.7%, over the past three months to M$2,558/tonne on 28 April, with strong expectations of further upward pressure in May.
Fatty alcohol prices in Asia had moved in the same direction, with the C12-C14 blended type jumping by about 14% or $200-250/tonne from end January to $1,600-1,700/tonne FOB (free on board) SE (southeast) Asia on Thursday.
The C16-18 blended material surged by around 15% to $1,250-1,300/tonne over the same period, based on data from global chemical market intelligence service, ICIS pricing.
Fatty alcohol producers would not get a reprieve soon from high feedstock costs, as CPO prices were expected to continue rising for the rest of the quarter given the dry spell afflicting palm plantations in southeast Asia, market players said.
“The current bad weather conditions in Malaysia and Indonesia - the main palm oil producing regions in southeast Asia – were likely to reduce the fresh fruit yield of palm fruit and reduce the amount of palm oil that could be processed,” said a palm oil producer.
($1 = €0.76/$1 = M$3.18)For more on oleochemicals visit ICIS chemical intelligence
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