05 October 2011 21:46 [Source: ICIS news]
HOUSTON (ICIS)--US tallow-based fatty acid producers are cutting back operating rates because of higher feedstock costs and sagging demand, suppliers said on Wednesday.
Producers said fatty acid operating rates are at about 80% after running in the mid-80s to low 90s earlier in the year.
Sagging demand for C18 stearic acids that go into various materials needed in the housing market is impacting overall fatty acid demand, one reason for the cutback in the operating rates, sources said.
“The economy is making a difference,” one supplier said.
C18 stearic acids go into several building materials as additives. Among the housing materials using C18 stearic acids, polyvinyl chloride (PVC) and certain treated-wood-product segments were said to be particularly affected by the weak housing market.
Prices for the primary tallow fatty acid feedstock, bleachable fancy tallow (BFT), have been in the 50s cents/lb during most of 2011, rising from the 30 cent/lb levels that predominated in 2010, according to prices at the Chicago cash market.
The rising cost of BFT has been widely attributed to biodiesel production because the industry can use a number of feedstocks, but tends to use mostly soybean oil or various types of fats, such as BFT.
BFT prices at the Chicago cash market on Wednesday were trading at 49 cents/lb ($1,080/tonne, €810/tonne), having closed on the same day last year at 33 cents/lb.
C18 triple pressed stearic acid prices were last assessed by ICIS at 72-77 cents/lb.
($1 = €0.75)
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