Price and market trends: Europe fatty alcohols market subdued

29 November 2012 18:49  [Source: ICB]

Activity in the European fatty alcohols market remains muted, with many buyers continuing to hold back from first-quarter negotiations in the hope of further falls in pricing, market participants said.

Mid-cut fatty alcohols were being traded around €1,350-1,400/tonne ($1,731-1,795/tonne) free delivered (FD) northwest Europe (NWE) the week ended 23 November, sources said.

 
Plummeting palm kernel oil values in the early part of the fourth quarter had previously deterred a number of buyers from entering contract negotiations.

With feedstock values remaining at low levels, many buyers remain hopeful that further declines to mid-cut fatty alcohols will take place.

Palm kernel oil was trading at $740/tonne DEL (delivered) south Malaysia at the close of trade on 21 November, this compares with $960/tonne DEL south Malaysia on 8 August.

COMMITMENT ISSUES
"I don't want to commit to purchasing further volumes when there is a chance that prices will fall further," one buyer said.

European producers maintain that mid-cut fatty alcohol prices have reached the lowest level they can go, with many arguing this price level is not sustainable in the long term. However, further downward pressure is being put on prices as a result of the excess material being brought over from Asia.

One buyer reports it had over-estimated demand during the third quarter, and still has excess fatty alcohols left over. "I am in no hurry to purchase any material at this time," the buyer said.

The buyer added that it would "possibly re-enter the market during mid-December". With year-end near and companies looking to destock, the buyer said its first-quarter purchasing "hinges on demand from its end-users picking up."


By: Neha Popat
+44 208 652 3214



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