23 March 2012 20:44 [Source: ICIS news]
HOUSTON (ICIS)--US C18:1 fatty acids will likely increase in April because of higher feedstock costs and snug supply, buyers and sellers said on Friday.
Vantage Oleochemicals issued a 3 cent/lb ($66/tonne, €50/tonne) price announcement on all grades of tallow fatty acids, including C18:1, effective on 1 April for all non-contracted customers or as allowed for contracted customers.
Other fatty acid producers had yet to confirm announcements or positions on fatty acid prices for April.
In its announcement, Vantage Oleochemicals said the price increase was driven by high demand of tall oil fatty acids (TOFAs) that has caused buyers to seek C18:1 fatty acids when unable to secure volumes of TOFAs. This situation has dipped into C18:1 supplies, decreasing availability.
Buyers said strong demand, especially in drilling fluids and other oilfield applications, was one reason TOFA supply was short.
TOFA and C18:1 buyers also said that TOFA producers were running at reduced rates because of difficulties in moving tall oil rosins. Those difficulties were based upon soft demand for rosins in paper, ink resins and construction adhesive end-use applications.
The other driver for the price increase is costs for feedstock bleachable fancy tallow (BFT).
BFT prices moved from the low-to-mid 40s cents/lb in January to the high 40s cents/lb in March.
On Friday, Chicago cash market BFT prices were at 49 cents/lb, matching the close at the same time last week.
BFT pricing is a core factor in fatty acid contracts and is used in biodiesel production, which is largely given as a reason for pushing up the feedstock costs.
ICIS last assessed C18:1 fatty acid contract prices in March at 70-73 cents/lb bulk DEL (delivered) and March TOFA fatty acids of 2-6% rosin at 65-70 cents/lb.
Tallow fatty acid producers and suppliers include Vantage Oleochemicals, VVF, Twin Rivers Technologies and Arizona Chemical.
Fatty acids are used in a wide array of end-uses, ranging from food and medical applications to paper and inks to construction and oilfield products.
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