FocusBuyers strongly resist Asia fatty alcohol at $2,000/t in August

26 July 2010 10:34  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian fatty alcohol prices may not hit $2,000/tonne (€1,540/tonne) in August on the back of strong buyers’ resistance to further price increases, industry sources said on Monday.

C12-14 blended alcohols had gained $490-500/tonne since the start of the year to $1,850-1,900/tonne FOB SE Asia FOB (free on board) SE (southeast) Asia as of 21 July, according to ICIS data.

For C16-18 blended alcohols, prices had increased by $250/tonne to $1,350-1,400/tonne FOB SE Asia over the same period, ICIS data showed.

“Buyers remained reluctant to buy any cargo above $1,930/tonne FOB SE Asia, currently. In fact, recent offers of $1,950/tonne FOB SE Asia attracted no interest,” said a Singapore-based trader.

Fatty alcohols’ continuous price increase since the start of the year was largely due to rising costs of feedstock palm oil, and supported by weak supply as most regional plants were operating at reduced capacity, market sources said.

“Producers are just inflating prices,” said a source at a large regional buyer.

Most buyers believed that there were no justifications to hike fatty alcohol prices despite higher feedstock costs.

Feedstock crude palm kernel oil (CPKO) values settled at $1,055/tonne FOB Malaysia on 21 July, up $145/tonne FOB Malaysia from 6 January, based on data from Bursa Malaysia.

Data from the Philippine Coconut Association, meanwhile, showed that crude coconut oil (CNO) closed at $1,040/tonne CIF Rotterdam, up $270/tonne CIF Rotterdam from 6 January 2010.

Fatty alcohols are used in a variety of industrial applications including detergents/surfactants, and to form ethoxylators to manufacture alcohol ethoxylates used in a variety of lubricating/cleaning industries. 

Some of the buyers were considering using synthetic alcohols, as well as other chemical alternatives, such as linear alkyl benzene sulfonic (LABS) acid to replace palm oil-based fatty alcohols in the detergents and surfactants industry, market sources said.

“A switch to non-palm oil based alcohols may not be easy as it involves product re-formulation which may translate to higher production cost compared to palm oil-based alcohol prices,” a Malaysian fatty alcohol producer said.

($1 = €0.77)

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By: Serena Seng

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