Europe fatty alcohol market subdued as buyers continue to hold back

12 December 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--Further declines to mid-cut fatty alcohol prices continue to stall negotiations in the European market, with increased numbers buyers opting to delay first-quarter negotiations until January, market participants said on Wednesday.

Mid-cut fatty alcohols are currently being traded around €1,250-1,300/tonne ($1,623-1,688/tonne) free delivered (FD) northwest Europe (NWE), sources said.

Although this is a significant reduction from the fourth-quarter contract settlements, buyers remain hopeful that prices will decline further in the New Year.

With two vessels scheduled to arrive into Europe between the end of December and early January, market participants believe greater downward pressure will be placed on prices.

Sources were unsure as to how much material is being transited on these vessels, however, one estimated it to be “at least 6,000 to 7,000 tonnes.”

Although suppliers are fighting to maintain fatty alcohol prices at the current level, one Europe-based producer conceded that this delivery of fatty alcohols into Europe will add to the “ample supply of material” and would “further increase the pressure on prices.”

With demand petering out as businesses wind down towards the Christmas and New Year break, many buyers report they have excess material left over from the previous quarter, which they would carry into January.

One buyer said it was in “no hurry” to commence negotiations for the first-quarter, and that it would wait until mid-January before re-entering the market.

Another buyer said that it believes suppliers would come under “increased pressure” to shift material, as they look to de-stock excess volumes currently in storage in Europe.

Meanwhile, feedstock palm kernel oil (PKO) prices continue to decline from the highs reached during the summer.

PKO was trading at $659/tonne DEL (delivered) south Malaysia at the close of trade on 12 December, this compares with $960/tonne DEL south Malaysia on 8 August.

($1 = €0.77)

By: Neha Popat
+44 208 652 3214

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