Asian soap noodles market at a standstill on buy-sell discord

20 July 2012 09:41  [Source: ICIS news]

SINGAPORE (ICIS)--Asia’s soap noodles market has come to a standstill as buyers and sellers continue to disagree on prices, market players said on Friday.

Suppliers are unwilling to lower their offers to below $1,000/tonne (€810/tonne) FOB (free on board) southeast (SE) Asia, citing squeezed margins as a result of higher-priced feedstock prices.

Feedstock crude palm oil (CPO) prices in the first half of the year stood at the mid-to-high Malaysian ringgit (M$) 3,000s/tonne ($952/tonne) FOB Malaysia, hitting the highest at M$3,600/tonne FOB Malaysia during the week ended 6 April.  

CPO prices were settled at M$2,991.50/tonne FOB Malaysia during the week ended 20 July.

“By lowering our prices to around $1,120/tonne FOB SEA three weeks ago, we were already losing margins so our current offer at a minimum of $1,035/tonne FOB SEA is the best we can do,” a Malaysian producer said.

A second producer is willing to lower its offer to $1,030/tonne FOB SEA at the minimum, but buying interest was weak, the producer said.

Buyers, on the other hand, continue to indicate prices at $960-980/tonne FOB SEA from the week ended 22 June, in line with previous declines seen in the feedstock markets.

“The end-users are uncertain about the trend in the volatile feedstock markets. They believe that prices will go down to the levels seen in June at below M$3,000/tonne FOB Malaysia,” a trader said.

Negotiations have come to a halt as a result of the wide buy-sell gap and market players have retreated to the sidelines to wait for feedstock prices to stabilise.

($1 = €0.81 / $1 =M$3.15)

By: Andrea Heng
+65 6780 4359

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