Palm fatty acid producers under pressure from declining tallow values

12 June 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European producers of palm-based fatty acids are feeling the pressure from the declining tallow-based acid prices, sources said on Wednesday.

With prices of raw tallow feedstock having fallen by €20-30/tonne ($27-40/tonne) as a result of weak demand from the biodiesel industry, participants in the oleochemicals markets note lower tallow stearic acid prices.

The two fatty acids usually compete with each other, with buyers that are capable of doing so switching between palm and tallow depending on what is the most competitively priced.

A producer of palm-based fatty acids said he was “feeling the competition” from declining tallow fatty acid prices, and as a result has dropped its offers to €800-850/tonne FD (free delivered) NWE (northwest Europe).

A tallow fatty acids producer said it had concluded some third-quarter tallow stearic volumes at €900/tonne FD NWE, but added that any further business would “most likely” be concluded below this level.

A buyer also heard offers for tallow stearic acid at the above level, but was opting to hold back from purchasing volumes for the third quarter, as it “hopes for” a further decline to prices.

Sources believe that palm fatty acid producers could come under further pressure from their tallow counterparts, should feedstock values continue to decline.   

Palm oleic and tallow oleic prices currently remain stable, at around €1,050/tonne FD NWE and €1,000/tonne FD NWE, sources said.

Market participants expect a conclusion to the majority of third-quarter negotiations by the end of June.

($1 = €0.75)


By: Neha Popat
+44 208 652 3214

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