Europe Q2 fatty acids/alcohols price hikes expected

29 March 2012 17:15  [Source: ICIS news]

LONDON (ICIS)--A lack of recent shipments from southeast Asia and rising palm feedstock costs have led to price increases for both fatty alcohols and palm-based fatty acids in Europe, market participants said on Thursday.

Prices of both products have remained relatively stable throughout most of the first quarter, with market conditions in balance.

Mid-cut fatty alcohols traded around €1,700/tonne ($2,255/tonne) FD (free delivered) NWE (northwest Europe), while palm oleic and palm stearic acids traded at €1,050–1,150/tonne FD NWE and €1,000–1,100/tonne FD NWE respectively during the same period.

However, recent supply shortages have altered the balance in Europe, and prices have since started to climb upwards.

Sources now report mid-cut alcohols are around €200/tonne FD NWE higher, while palm oleic acids were heard trading between €1,180–1,250/tonne FD NWE, and palm stearic acid were heard in the €1,200–1,250/tonne FD NWE range.

Many anticipate the upward trend continuing during second-quarter contract negotiations.

“With no new shipments scheduled to arrive [from Asia] until the end of April, I cannot see prices softening in the short term,” one buyer said.

Uncertainty over future product pricing continues to drive increasing numbers of consumers into the spot market.

The Bursa Malaysia crude palm oil April delivery contracts rose by ringgits (M$) 143/tonne ($47/tonne, €35/tonne) to settle at M$3,510/tonne on 28 March. However, buyers remain hopeful for a decline in palm feedstock prices during May.

“We are now seeing greater enquiries in the spot market, as buyers remain optimistic that the further volumes arriving in April will place downward pressure on prices come May,” one producer said.

Tallow stearic acid traded in the spot market this week at around €1,100/tonne FD NWE, and tallow oleic around €1,250/tonne FD NWE, both within the first-quarter contract price ranges.

However, it is expected that these prices will soon increase, following the trend set by their palm-based counterparts.

($1 = €0.75, $1 = M$3.07, €1 = M$4.09)

By: Neha Popat
+44 208 652 3214

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