Price and market trends: Europe Q2 fatty acid prices edge down from Q1

19 April 2013 13:16  [Source: ICB]

European second-quarter fatty acid prices have edged down from first-quarter levels, sources said on 10 April.

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 in 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 about when demand from this sector will improve.

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

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

This has led to Q2 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 Q1 levels.

Q2 tallow oleic prices settled at €1,000-1,200/tonne FD NWE, representing 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 the advantage and become the cheaper option throughout this quarter.

Palm-based acids down
Q2 palm-based acids also fell, albeit by not as much as originally expected. Palm feedstock prices significantly declined towards the end of 2012 and in early 2013.

Palm kernel oil was trading at $772/tonne DEL (delivered) south Malaysia in the week ending 14 April, compared with prices of $960/tonne DEL south Malaysia reached in early August 2012.

By: Neha Popat
+44 208 652 3214

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