10 May 2013 09:42 [Source: ICB]
Mid-cut fatty alcohol contract prices for the second quarter in Europe have rolled over or slightly increased from first-quarter levels, market participants said.
Second-quarter contracts settled in the €1,130-1,250/tonne FD (free delivered) NWE (northwest Europe) range, up by €50/tonne from the first quarter.
Many buyers were hopeful that there would be further price declines with extra capacity coming on stream in the early part of the year, which led many to hold back from the negotiation process.
However, the added capacity has yet to take hold on the European market, leading prices to remain around first-quarter levels, or in some cases increase.
Participants said buyers who had settled their second-quarter business earlier could purchase volumes at the lower end of the range, while those who had held back had to settle at the high end. One producer believes there is room for a further increase in mid-cut alcohol prices. Having recently sold mid-cut alcohols in the spot market at €1,200/tonne ex-tank Rotterdam, it says it could raise this offer by a further €50/tonne. "I would have no hesitation in increasing prices by this much," the producer said.
With prices in Asia remaining firm due to ongoing and impending turnarounds, the producer believes fewer volumes will head to Europe in the second quarter, drawing further on supplies here. However, some buyers are cautious because of weak demand from their end-users, and have opted to buy fewer volumes than previously. "I have only covered for [my] contractual requirements and will only purchase more if demand improves during this quarter," one buyer said.
The majority of participants believe fatty alcohol prices will remain around the levels they are currently being discussed at in the short term.
Both buyers and suppliers are in agreement that prices may well increase further towards the end of the second quarter.
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