US Q3 tallow fatty acid prices may rise on higher demand

21 June 2010 22:33  [Source: ICIS news]

HOUSTON (ICIS news)--US tallow-based fatty acid prices may rise in the third quarter due to stronger demand and tighter supplies, buyers and sellers said on Monday.

At least one major tallow-based oleic acid (C18:1) supplier said it would seek an increase of 5 cents/lb ($110/tonne, €88/tonne) for non-contracted customers and as allowed for contracted customers, effective on 1 July.

Other US fatty acid producers said they were also considering third-quarter price increases.

The drain on oleic fatty acid supplies began with the BP oil spill in the Gulf of Mexico, suppliers said. BP broke up the oil with dispersants, which were made with surfactants.

“We have the longest lead times we have seen in almost two years,” one producer said.

Lead times were now about three to four weeks, up from about two weeks, sources said.

The oil spill should have a short-term effect on the market. However, it coincided with a general increase in US demand for oleochemical and fatty-acid derivatives such as esters, amides and metallic stearates, producers said.  

Triple-pressed stearic acids (TPSA) and rubber-grade (RBG) material were not directly involved in making the surfactants since they were C18 products, a source said.

However, fatty acid suppliers had to skip the C18 products and make the C18:1 when possible to meet the oleic demand and still keep contract commitments, the source said.

While suppliers were considering increases for C18:1 oleics, no increases for stearics were being discussed so far.

ICIS assessed C18:1 tallow-based oleic acids at 62-65 cents/lb DEL (delivered), C18 TPSA at 52-55 cents/lb DEL and C18 RBG at 47-49 cents/lb DEL.

Tallow and vegetable fatty acid producers include Procter & Gamble, Vantage Oleochemical and Cognis.

($1 = €0.80)

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By: Judith Taylor
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