Europe Q2 fatty acid prices edge down from Q1

10 April 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European second-quarter fatty acid prices have edged down from first-quarter levels, sources said on Wednesday.

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

Falling raw tallow prices throughout the first quarter led to pressure being placed on tallow-based fatty acids.

With ample material being made available to tallow fatty acid producers, prices steadily declined.

Demand from the biodiesel industry for this material remains at low levels, and with cold weather continuing to be experienced in parts of Europe, sources are unsure as to when demand from this sector will improve.

One tallow fatty acids producer now expects prices “around €650/tonne” depending on the quality.

Furthermore, sources note declining palm feedstock prices placing further pressure on prices.

This has led to second-quarter tallow stearic acid settling in a range of €900-980/tonne ($1,184-1,289/tonne) FD (free delivered) NWE (northwest Europe), a fall of €50-120/tonne from first-quarter levels.

Second-quarter tallow oleic prices, meanwhile, settled at €1,000-1,200/tonne FD NWE. This represents a decline of €50-150/tonne from the first quarter.

Sources anticipate tallow prices picking up again later on in the second quarter, by how much depends on the pick up in demand from the biodiesel industry.

Most believe, however, that palm-based acids will regain advantage and become the cheaper option throughout this quarter.

Second-quarter palm-based acids also declined from first-quarter levels, although by not as much as originally expected.

Palm feedstock prices significantly declined towards the end of 2012 and in the early part of this year.

Palm kernel oil was this week trading at $772/tonne DEL (delivered) south Malaysia, this compares with prices of $960/tonne DEL south Malaysia reached in early August 2012.

One trader said palm-based fatty acid prices have yet to fall owing to feedstock costs edging up lately, as well as the “lower exchange rate” which is working against participants in Europe.

Second-quarter palm stearic acid prices settled in a range of €900-1,000/tonne FD NWE, a reduction of €50/tonne from the first quarter.

While second-quarter palm oleic acid prices settled at €1,050-1,150/tonne FD NWE, a reduction of €30-50/tonne from the first quarter.

($1 = €0.76)

By: Neha Popat
+44 208 652 3214

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