23 September 2010 07:12 [Source: ICIS news]
By Serena Seng and Nurluqman Suratman
SINGAPORE (ICIS)--Prices of oleochemicals in southeast (SE) Asia are expected to remain firm for the rest of 2010 on healthy demand and consistently high prices of palm oil derivative feedstock, traders and market participants said on Thursday.
C12 lauric acid prices saw a $50/tonne (€37.5) rise this week to $1,700-1,770/tonne FOB (free on board) SE Asia, while C14 myristic acid also grew $50/tonne to $1,770-1,820/tonne FOB SE Asia due to supply constraints, according to ICIS.
“Prices of most fatty acids are expected to remain firm in the third and fourth quarter of this year as feedstock values are expected to go up,” said a trader.
High demand for fatty acids in the production of downstream consumer goods such as cosmetics and plastics would ensure that prices remain at current levels or rise further, the trader added.
Fatty acids values largely follow price trends of feedstocks palm kernel, palm stearin and crude palm oil (CPO), which have been rising steadily since the beginning of 2010, market sources said.
Average prices of Malaysian crude palm oil (CPO) in August grew 11% month-on-month to Malaysian ringgit (M$) 2,724/tonne ($882/tonne), according to data from the Malaysian Palm Oil Council (MPOC).
In the January-June period of this year, average CPO prices rose 14% to M$2,559/tonne, as compared to the corresponding period in 2009, the MPOC data showed.
Robust CPO and palm derivative feedstock prices had also led to a rise in fatty alcohol values, which had touched historical highs in August and were expected to remain strong for the rest of 2010, traders 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 both midcut and long-chain alcohols had been steadily rising since January with midcut alcohols touching levels above $2,000/tonne FOB SE Asia in August, according to ICIS.
Spot prices of C12-14 fatty alcohol rose $50/tonne this week to $2050-2150/tonne FOB SE Asia on the back of “overly-inflated” CPO prices, sources said.
Strong downstream demand and tight supply amid plant shutdowns in the region could help buoy the prices of fatty alcohols further, market sources said.
Refined glycerine however seemed to buck the trend with prices expected to remain soft-to-stable for the rest of 2010 due to oversupply and weak demand in the region, traders said.
Refined glycerine is a by-product of fatty acids and fatty alcohol production and is used mainly in the production of soap, cosmetics and pharmaceuticals.
Traders expected demand to pick up in 2011 and 2012 once new applications for glycerine are introduced, such as in the production of epichlorohydrin (ECH), propylene glycol aromatics solvents as well as polymers.
While demand for refined glycerine in 2010 was expected to be around 280,000 tonnes, supply was estimated to be more than double the required amount at 543,000 tonnes, market sources said.
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