FocusAsian soap noodle prices rise on firm feedstocks and demand

27 August 2012 08:23  [Source: ICIS news]

By Andrea Heng

SINGAPORE (ICIS)--Asia’s soap noodle market is bullish on the back of rising feedstock prices and steadily growing demand, with producers increasing their offers as a result, market sources said on Monday.

Prices were assessed at $970-1,000/tonne (€776-700/tonne) FOB (free on board) southeast (SE) Asia during the week ended 24 August in main producing regions Malaysia and Indonesia, up by $10-20/tonne FOB SE Asia week on week, according to data from ICIS.

Although some participants were absent from the market during the week amid the Muslim festival of Eid ul-Fitr - that comes at the conclusion of the fasting month of Ramdan - which started on 19 August, sellers’ offers were higher in line with the uptrend in the feedstock markets during the week.

Crude palm oil (CPO) prices rose from Malaysian ringgit (M$) 2,740/tonne DEL (delivered) Malaysia to M$2,980/tonne DEL Malaysia week on week, according to the last transaction on the Malaysian Palm Oil Board on 22 August.

“Buying activity increased prior to Eid ul-Fitr as most customers believed the market bottomed out a week earlier and are seeking to restock before prices rise further,” a southeast Asian producer said.

Trade activity increased slightly as the summer holiday season in Europe nears its end in September.

“We heard more enquiries before Eid ul-Fitr and have advised our customers to purchase before the prices increase again,” a southeast Asian trader said.

Chinese prices also rose by yuan (CNY) 400/tonne EXW (ex-works) China to CNY7,800-8,000/tonne EXW China in the same week because of the higher feedstock costs and steadily growing demand from importing countries in Europe.

“In addition, local customers have to consider switching to the standard 80/20 grade of soap noodles because factories in south China that were producing the cheaper, imitation grades have been ordered to shut down,” a major Chinese producer said.

Similarly, Indian prices of soap noodles increased by Indian rupees (Rs) 3,000/tonne EXW India.

“Both local and foreign demand is expected to increase around September, when Europe’s summer holidays and India’s monsoon weather ends,” an Indian producer said.

However, other market participants said this may be a marginal increase of 5-10% as India’s festive season in October indicates short-term demand.

“When winter begins after October, India’s demand will taper until February, when customers stock up ahead of warmer weather in March-May,” a trader added.

Soap noodles, which are made from vegetable or animal fat, are used in the manufacture of soap bars in the beauty and pharmaceutical industry.

($1 = €0.80, $1 = CNY6.36, $1 = Rs55.50)

By: Andrea Heng
+65 6780 4359

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