07 October 2012 16:21 [Source: ICIS news]
Speaking on the sidelines of the 46th annual European Petrochemical Association (EPCA) meeting in Budapest, Hungary, the buyer said that “the movement of natural fatty alcohols will more or less be determined on what happens to November ethylene prices.”
Ethylene is used in the production of synthetic fatty alcohols, and buyers with the capability of doing so switch between natural and synthetic alcohols depending on whichever is priced cheaper.
The October ethylene contract price settled at €1,290/tonne ($1,675/tonne), and natural mid-cut fatty alcohols are also currently being talked at around this level.
Although natural mid-cut fatty alcohols prices have declined significantly from the third-quarter levels of €1,750-1,900/tonne, plummeting palm kernel oil values continue to deter natural fatty alcohol buyers from concluding business for the fourth quarter.
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.
Many buyers remain hopeful of even lower offers from suppliers.
With prices of natural fatty alcohols so closely aligned in movements to the ethylene prices, the buyer believes that natural mid-cut fatty alcohols “could possibly come down to €1,250/tonne – only if ethylene is to decline from its current levels.”
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