US oleic and tall oil fatty acid April contracts rise on supply

12 April 2012 23:08  [Source: ICIS news]

HOUSTON (ICIS)--US tallow derived oleic and tall oil-based fatty acid contract prices are up by 3 cents/lb ($66/tonne, €50/tonne) in April contracts as tight supply in the C18 chain has buyers searching for material, buyers and sellers said on Thursday.

C18:1 oleic fatty acid April contracts were assessed at 73-76 cents/lb delivered, with the tall oil fatty acids (TOFAs) assessed at 68-73 cents/lb, same basis.

C18:1 fatty acids typically carry a premium of about 5 cents/lb over the TOFAs, but widely improving US demand in end-uses ranging from oilfield applications to food additives has buyers scrambling for C18s, sources said.

“I am sold out through May,” one supplier said.

“In fact, I am beyond sold out,” the source added.

When C18:1 oleic acid supply gets tight, many buyers can switch to TOFAs to access additional resources, and often at a lower price.

But a slowdown in production at US paper mills and less softwood being imported from China were two reasons sources gave about the short supply in the TOFAs.

TOFA feedstock is crude tall oil (CTO), a by-product of certain paper mill processes.

“It is ugly tight and it will not get better until the third quarter,” a producer said.

US tallow-based fatty acid producers and tall oil fractionators or producers include Emery Oleochemical, Twin Rivers Technologies, VVF, Arizona Chemical, MeadWestvaco and Georgia Pacific.

($1 =  €0.76)

By: Judith Taylor
+1 713 525 2653

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