Falling feedstocks deter Europe fatty alcohol buyers from Q4 talks

03 October 2012 15:02  [Source: ICIS news]

LONDON (ICIS)--Plummeting palm kernel oil (PKO) values continue to deter European fatty alcohol buyers from concluding business for the fourth quarter, with many hopeful of even lower offers from suppliers, market participants said on Wednesday.

With prices of the feedstock continuing to fall in Asia, buyers are certain it is only a matter of time before suppliers buckle under the increasing pressure.

PKO was trading at $786/tonne (€605/tonne) DEL (delivered) south Malaysia on 3 October, compared with $808/tonne DEL south Malaysia last week.

While production of palm oil has increased – as is usual for this time of year – demand for exports globally remains weak, and continues to exert downward pressure on PKO values, leading to softer fatty alcohol prices in Europe.

Last week, one buyer reported it was offered mid-cut fatty alcohols from a producer in Asia at €1,420/tonne ($1,844/tonne) ex-tank Rotterdam.

This week, sources report prices of the same material at €1,350-1,380/tonne ex-tank Rotterdam.

“[Fatty alcohol prices] are getting lower and lower each week,” another buyer said.

With suppliers in Asia able to offer material more cheaply than their European counterparts, sources also believe that further strain will be placed on prices, as European producers remain under pressure to stay competitive. 

Statistics from the Malaysian Palm Oil Board show that palm oil stocks were at the highest level for 10 months in August.

With stock levels reaching 2.1m tonnes in August – up from 2.0m in July – and demand remaining weak, both suppliers and buyers concede that fatty alcohol prices are likely to remain under pressure throughout the fourth quarter.

With the majority of consumers opting to stay away from fourth-quarter contractual negotiations, only minimal levels of concluded business have  yet been reported.

($1 = €0.77)

By: Neha Popat
+44 208 652 3214

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