19 May 2010 21:16 [Source: ICIS news]
(adds paragraph 14)
HOUSTON (ICIS news)--Supplies of oleic fatty acids are tightening as the material is being used to make dispersants - a key product that BP is using to break up a massive oil spill in the Gulf of Mexico, buyers and sellers said on Wednesday.
“Price is not a problem,” one fatty acid supplier said.
“We are seeing all kinds of effects, but it is short term,” a buyer said.
The scramble is on to get the fatty acid, referred to as C18:1 oleic acid, processed into the surfactant products being used as dispersants for the huge oil slick in the Gulf of Mexico.
Oil began leaking from the well after the 20 April explosion of the Deepwater Horizon rig.
“We are cautious about our inventory,” a fatty acid producer said. “We do not want to over commit,” the source added.
Oleic acid can be made from tallow or from vegetable oil. The US is an active tallow-based fatty acid producer, but it is a net importer of vegetable-oil-derived fatty acids, including oleic.
“We are pulling from both types,” a supplier said. “But if it is veg-based oleic, then we have to wait for supply to come from Asia,” the supplier said.
Suppliers are closely monitoring inventories, but the pull on fatty acids is very strong, distributor sources said.
“They are throwing everything at it,” one large distributor said.
Tallow-based C18:1 oleic acid contract prices were last assessed at 60-63 cents/lb ($1,323-1,389/tonne, €1,085-1,139/tonne), according to global chemical market intelligence service ICIS pricing. Most tallow-based US fatty acid business is conducted on a monthly contract basis directly related to tallow fat pricing in the midwest.
Market sources said current prices for oleic were moving into a short-term spot basis, with 66 cents/lb at the bottom of a range undefined due to the nature of the event.
Vegetable-derived oleic acid was assessed at 68-70 cents/lb FOB (free on board) southeast Asia.
Fatty acid producers include Procter & Gamble, Vantage Oleochemical, Emery Oleochemicals and Dial.
($1 = €0.82)
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections