Europe Q1 mid-cut fatty alcohol contracts down slightly from Q4

25 January 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--The majority of European mid-cut fatty alcohol contracts have settled within a range of €1,625–1,700/tonne for the first quarter, a slight decrease from fourth-quarter levels, buyers and sellers said on Wednesday.

The range for contract prices, which was settled on a free delivered (FD) northwest Europe (NWE) basis, is down by €50/tonne ($65/tonne) on the high end, but remains within the fourth-quarter contract settlement range.

A small number of contract settlements were heard either side of the range, but these were outside of a wide-ranging consensus.

Consumers that concluded business in advance of the New Year break were able to purchase material towards the lower end of the range, while those that waited until January settled at the higher end as producers pushed for increases in the new year.

Despite heavy rainfall causing lower harvest yields of feedstock crude palm kernel oil in Asia, participants have yet to see the resulting higher prices of material impacting significantly on fatty alcohol prices in Europe.

Feedstock crude palm kernel oil (CPKO) prices were around $1,200/tonne FOB (free on board) Malaysia for most of December, but hit $1,412/tonne FOB Malaysia on 4 January owing to tight supply in the region.

Although CPKO prices have fallen since then, some suppliers in southeast Asia have been heard offering mid-cut material to European consumers at higher levels. These offers have not as yet resulted in concluded business.

“I was this week offered mid-cut fatty alcohols at €1,900/tonne FD NWE, but I know I can get lower from European producers,” said one buyer.

Meanwhile, C8-10 short chain alcohols were heard trading at €1,450–1,500/tonne ex tank, and C16-18 long chain alcohols at €1,400–1,500/tonne ex tank.

With plenty of available material currently in storage in northwest Europe, market participants expect higher feedstock values may significantly impact on fatty alcohol prices towards the end of the first quarter, once new shipments start to arrive from southeast Asia.

Despite differing opinions between buyers and sellers, there was consensus among both parties that greater uncertainty over future demand levels has resulted in increased activity within the spot market of late.

($1 = €0.77)

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By: Neha Popat
+44 208 652 3214

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