Europe Q2 fatty stearic acids increase as oleic acids remain stable

06 April 2011 19:20  [Source: ICIS news]

LONDON (ICIS)--European stearic fatty acid contract prices for the second quarter have increased from first quarter levels, while oleic acids remained stable, market participants said on Wednesday.

With the majority of the market players now thought to have settled their contracts for the second quarter, many indicated an increase in those for stearic acids.

Tallow-based material settled between €1,100-1,200/tonne ($1,562-1,702/tonne) FD NWE (free delivered, northwest Europe), an increase of €70/tonne on the low side, and €100/tonne on the high side.

Palm-based material settled between €1,150-1,300/tonne FD NWE, an increase of €100/tonne on the low side, and €50/tonne on the high side.

In contrast, oleic products remained unchanged from first-quarter prices.

Tallow based material was settled between €1,400-1,450/tonne FD NWE, and palm based material for the second quarter between €1,400-1,450/tonne FD NWE, both unchanged.

Sources explained the different trends were the result of differing feedstock pricing.

All palm-based feedstock prices have seen strong gains in recent months, with Bursa Malaysia crude palm oil hitting an all time high of ringgit (M$) 3,643/tonne (€838/tonne) during the week ending 11 March.

However, recent weeks have seen feedstock prices mark a sharp decline from these levels in the wake of the Palm and Lauric Oils Conference and Exhibition (POC2011) in Kuala Lumpur, Malaysia on 5-7 March.

Although all palm-based feedstock decreased in price, market players noted that palm stearin, a key feedstock for palm-based stearic acids, had not declined as rapidly in value as palm and palm kernel oil, from which oleic acids are produced.

Many believed this to be a reason behind the increased prices for stearic acids, as producers increased prices of these products to maintain their profit margins.

“Feedstock prices decreased after the POC; in general they lost around $300/tonne…but this is still much higher than 2010 levels. Some people are expecting a further drop, but a lot of producers are going long on supplies; they’re pessimistic about [feedstock] prices,” a producer said.

The price increase in palm-stearic products was also thought to be adding to the upwards pressure on tallow-stearic acids, which marked similar increases.  

($1 = €0.70) (€1 = M$4.30)

By: Neha Popat
+44 208 652 3214

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