FocusAsia soap noodles may stay soft as feedstock costs fall

06 April 2011 05:04  [Source: ICIS news]

Palm fruits being harvested. Supply of crude palm oil (CPO), crude palm kernel oil (CPKO), palm stearin and crude coconut oil (CNO) – the raw materials for the production of soap noodles – is expected to be seasonally strong in April.By Serena Seng

SINGAPORE (ICIS)--Spot prices of 80/20 blend soap noodles in Asia may remain weak this month despite an anticipated pick-up in demand, as producers benefit from falling costs of feedstocks, industry sources said on Wednesday.

On 1 April, 80/20 blend soap noodle prices slipped $10/tonne (€7/tonne) week on week to $1,240-1,290/tonne FOB (free on board) SE (southeast) Asia, according to ICIS data.

Supply of crude palm oil (CPO), crude palm kernel oil (CPKO), palm stearin and crude coconut oil (CNO) – the raw materials for the production of soap noodles – will be seasonally strong in April, auguring further declines in feedstock prices in the weeks ahead, industry sources said.

This will offset any price boost from the start of the traditional peak demand season for soap noodles from April to June, they said.

“We have seen more buying activity starting last week and expect more in the coming weeks,” said an Indonesian soap noodle producer.

Soap noodles are used as the main ingredient in the production of soap bars.

“[But] Prices are unlikely to increase as raw material costs look likely to be low. The upcoming April harvest would add more CPO supply into the market,” said a palm oil trader said.

A China-based soap noodle buyer said prices may remain at current levels or even fall.

“I doubt prices will increase as most sellers will want to close as much deals as possible during these upcoming three months,” the buyer said.

Sharp falls in values of major feedstocks saw soap noodle prices shedding $140-160/tonne from 25 February to 1 April, according to ICIS data.

CPO prices slipped 2.2% from 25 February to Malaysian ringgit (M$) 3,430/tonne ($1,132/tonne) on 5 April, while CPKO slumped 19.1% over the same period to $1,763/tonne, while CNO fell 7.24% to $2,050/tonne CIF (cost, insurance and freight) Rotterdam, according to data from Bursa Malaysia.

($1 = €0.70 / $1 = M$3.03)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Serena Seng

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