Initial Q2 fatty alcohol discussions indicate slight increase

05 March 2013 09:51  [Source: ICIS news]

KUALA LUMPUR (ICIS)--Initial second-quarter fatty alcohol discussions among European participants suggest expectations of a slight increase to prices from current levels, sources said on Tuesday.

Speaking on the sidelines of the Palm and Lauric Oils Conference and Exhibition Price Outlook 2013 (POC) in Kuala Lumpur, Malaysia, both suppliers and buyers believed that an increase to fatty alcohol prices was likely in the aftermath of the event.

With the majority of participants opting to finalise their second-quarter negotiations after the POC, many remain reluctant to discuss pricing levels.

However, one buyer said it “expected a €70-100/tonne [$91-130/tonne] increase from current levels”.

Prices declined after the conclusion of  first-quarter contract discussions, when mid-cuts settled within a range of €1,130-1,200/tonne FD (free delivered) NWE (northwest Europe).

Ample supply in Europe, as well as weakening feedstock prices, had placed a strong downward pressure on fatty alcohols, leading mid-cut prices to reach as low as €1,050/tonne FD NWE in some cases.

However, with crude palm kernel oil prices now on the rise again, many believe this will lead to an increase in fatty alcohols. 

Speaking to ICIS, one supplier said it had concluded some second quarter mid-cut fatty alcohol volumes with its consumers at €1,100/tonne ex-tank Rotterdam.

The upturn in palm kernel oil values leads the supplier to believe that “increases of around €50/tonne [to mid-cut prices] are now likely”.

With European ethylene prices for March agreed up by €50/tonne from February, the previously mentioned buyer believed the higher synthetic alcohols, which use ethylene as a feedstock, would also help to support prices of the natural-based alternative.

($1 = €0.77)

By: Neha Popat
+44 208 652 3214

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