Europe Q1 fatty acids prices down from Q4 levels

23 January 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European stearic and oleic fatty acid first-quarter contract prices have declined from fourth quarter levels, market participants said on Wednesday.

With the majority of players now thought to have settled contracts for the fourth-quarter, many indicated a decline in both palm and tallow-based stearic and oleic acid prices.

Participants attributed the fall in palm and tallow-based grades to softening feedstock costs towards the end of last year, while plummeting palm feedstock values led to strong downward pressure being placed on palm-based fatty acids, sources said. 

Palm kernel oil was trading at $740/tonne (€555/tonne) DEL (delivered) south Malaysia on 23 January, compared with $921/tonne DEL south Malaysia on 19 September. This saw palm oleic acid settling between €1,080-1,200/tonne FD (free delivered) NWE (northwest Europe), a decline of €100-120/tonne from the previous quarter.

Palm stearic acid settled between €950-1,050/tonne FD NWE a fall of €100/tonne on the low and €150/tonne on the high side.   

Meanwhile, tallow oleic acid settled between €1,150-1,250/tonne FD NWE, a fall of €50/tonne on the low and €100/tonne on the high side, and tallow stearic acid settled between €950-1,100/tonne FD NWE, a decline of €100/tonne.

A few deals were heard at either side of the above ranges, but these were outside of the widely-agreed consensus.

“With demand from the biodiesel industry for raw tallow feedstock lower in the winter months, greater volumes were made available for tallow acid suppliers, which in turn led to lower prices,” one producer said.

Other tallow fatty acid suppliers witnessed increased competition from the palm-based alternatives, placing further pressure on prices. Many reported that their buyers had switched to palm fatty acids as it was cheaper.

The lower prices were also accentuated by weaker demand, which was witnessed throughout the fourth quarter of 2012.

Although sources report that demand has picked up since December, many are unsure as to whether this is a sign of an improvement in the industry, or whether buyers are just looking to replenish their stocks.

($1 = €0.75)

By: Neha Popat
+44 208 652 3214

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