Europe Q2 fatty acids prices rise on feedstock costs

04 April 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European fatty acid contract prices for the second quarter have increased from first-quarter levels owing to firming palm and tallow raw material costs, market participants said on Wednesday.

Palm stearic acid settled in a range of €1,050–1,200/tonne ($1,378–1,575/tonne) FD (free delivered) NWE (northwest Europe) – an increase of €50/tonne on the low side and €100/tonne on the high side from the first quarter.

Palm oleic acids settled in a range of €1,150–1,300/tonne FD NWE – up €100/tonne on the low side and €150/tonne on the high side.

With the vast majority of market players now thought to have settled their contracts for the second quarter, many attributed the increase in palm-based acids to the increase in palm feedstock costs, which have climbed rapidly in the past few weeks.

A few sources purchased material at a discount to the second-quarter price ranges above, having concluded business before the Palm and Lauric Oils Conference & Exhibition Price Outlook (POC2012) in early March.

Although prices of all grades of fatty acids remained stable throughout most of the first quarter, a lack of recent shipments from southeast Asia, together with rising feedstock costs, have caused the rapid price hikes for palm-based fatty acids.

The Bursa Malaysia CPO April delivery contracts rose by ringgit (M$) 66/tonne to settle at M$3,576/tonne at the close of trade on 4 April.

With no new shipments scheduled to arrive until late April, many anticipate the upward trend continuing throughout the rest of the month and heading into May.

“I cannot see prices softening in the short term,” one buyer said.

In addition to the upward influence of higher feedstock costs, producers believe an extra interest in fatty acids is tightening the market.

It is thought this is likely to exert further upward pressure on prices in the coming weeks.

Tallow stearic acids also increased from first-quarter levels, settling between €1,050–1,150/tonne FD NWE – an increase of €50/tonne on the low side.

Tallow oleic acids also saw increases, settling between €1,150-1,250/tonne FD NWE – up €100/tonne on the low side.

Improving demand from the biodiesel sector has led to a shortage of raw tallow feedstock in Europe, pushing up prices of the material.

“Prices are now between €800-850/tonne, depending on the quality of tallow feedstock,” one producer said.

Although the rate of price increases for tallow-based fatty acids has been slower than that for their palm-based counterparts, many sources expect prices for these tallow grades of acids to continue to climb in the second quarter.

($1 = €0.76, $1 = M$3.05, €1 = M$4.03)


By: Neha Popat
+44 208 652 3214



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