22 August 2012 15:16 [Source: ICIS news]
LONDON (ICIS)--Negotiations for fatty alcohol prices in September remain tentative, with buyers hoping for lower prices and producers reluctant to further erode their margins, sources said on Wednesday.
Although discussions have been slow to commence because of the summer holiday season in Europe, participants that have returned from their breaks report a difference of opinion between consumers and suppliers.
With palm feedstock prices in Asia softening, spot material in the region is now being offered at lower levels.
Mid-cut C12-14 material was offered at $1,600-1,700/tonne (€1,280-€1,360) FOB (free on board) SE Asia (southeast Asia) during the week ending 15 August, a fall of $100/tonne from the previous week.
With plenty of material already available to European consumers in tanks, and more vessels scheduled to arrive in the region at the end of August and in early September, many buyers believe that further pressure will be placed on producers to sell volumes.
“Demand is lower than they [the producers] anticipated, they will be anxious to shift material before the scheduled volumes arrive,” a buyer said.
One producer reports mid-cut fatty alcohol prices spot trading at €1,600/tonne FD (free delivered) NWE (northwest Europe) this week, a fall of €150-300/tonne FD NWE from third-quarter contract prices.
The producer remains concerned that ailing demand could result in more bearish pressure on the market.
However, with palm kernel oil values increasing this week, the producer believes there is no guarantee that fatty alcohol prices will decline further in Europe.
Palm kernel oil is currently trading at $1,034/tonne DEL (delivered) south Malaysia, an increase of $132/tonne from last week.
“With much of Europe still on vacation, it is far too early to determine where fourth quarter prices will stand,” said one producer.
Sources believe a much clearer picture will emerge in around two-to-three weeks, once the majority of players are back and contract negotiations are up to full speed.
($1 = €0.80)
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