US Q4 fatty alcohol contracts pressured down on supply/demand

24 September 2012 22:13  [Source: ICIS news]

HOUSTON (ICIS)--Fourth-quarter US fatty alcohol contracts are under negotiation, with downward pressure from ample supply and standard demand, buyers said on Monday.

“Natural alcohol contracts are settling fast and most are down from third-quarter,” one mid-cut alcohol buyer said.

Natural alcohols primarily use palm kernel oil (PKO) as a feedstock, with almost all global production in Asia.

Increasing alcohol supply in Asia is part of the reason pressuring fourth-quarter contracts down, as several new plants have come on-stream over the past year.

Additionally, sources said that Chinese demand was down, pushing producers to seek the export market for off take.

Synthetic alcohols, produced domestically with ethylene as a feedstock, are expected to achieve contract prices alongside those made from PKO because of attractive natural gas costs.

US fatty alcohol demand has largely matched US domestic demand in a number of chemicals by remaining stable, but at a fairly mundane pace during 2012.

Mid-cut alcohol buyers said year-end inventory assessments are also making a difference in the fourth-quarter contract negotiations, as companies seek to minimise inventory nearing the end of a year.

Third-quarter mid-cut fatty alcohol contracts, for natural and synthetic product, were assessed at $105-118 cents/lb ($2,315-2,601/tonne, €1,783-2,003/tonne).

Procter & Gamble, VVF and Wilmar are among the major natural fatty alcohol producers. Shell and Sasol produce alcohols by synthetic technologies.

Fatty alcohols are found in a variety of end-uses, with surfactants the largest end-use sector for the mid-cuts.

($1 = €0.77)

By: Judith Taylor
+1 713 525 2653

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