US July fatty acids contracts move up on rising feedstock costs

11 July 2013 17:46  [Source: ICIS news]

MEDELLIN, Colombia (ICIS)--Pricing in the tallow-based fatty acid market in the US was assessed upward on Thursday for July contract pricing, as much of the market participates in formula pricing.

Bleachable fancy tallow (BFT), typically used as a feedstock for tallow-based acids producers, averages for June saw an increase of about 2 cents/lb ($44/tonne, €34/tonne) over the course of the month, putting the BFT average at about 45.50 cents/lb in June. 

C18 triple pressed stearic acid (TPSA) contract ranges for July were assessed at 65-69 cents/lb, while C18 rubber grade stearics were at 59-64 cents/lb, according to ICIS.

Stearic acid tiers are balanced amid continued healthy demand from end-use sectors, buyers and sellers said, with supply described as plentiful.

One trader said that stearics were trending to a long position, with C18 TPSA production high as producers are trying to increase the co-product C18:1 oleic acid supply.

The oleic tier is seeing upward pressure from both the supply and demand side of the market, and tallow-based oleic fatty acids were assessed on the same basis, moving up in the July spread to 81-85 cents/lb. 

C16 palmitic, non-kosher prices were assessed at a rollover at 65-70 cents/lb, with the basis for the spread formed by the FOB (free on board) southeast Asian prices plus freights and storage. Asia spot palmitic prices have decreased since June, but shipping rates increased, forming the basis for the rollover.

Tall oil fatty acids (TOFAs) were assessed lower by 2 cents/lb, putting ranges at 78-83 cents/lb, as buyers and sellers in the oleics tier said TOFA supply had increased with most producers running at about 85% utilization rates, balanced to rosin sales.

Prices for medium-sized TOFA buyers offered in the market were in the high 70s cents/lb range, buyers said.

Demand in downstream construction and tyre sectors was said to be trending up, and players expect TOFA pricing to firm moving through the third quarter.

US new motor vehicle sales in June were poised to record their strongest month in more than five years, and factories posted a second straight month of gains in new orders in May, indicating some pick-up in economic activity.

Confidence among US homebuilders surged in June, staging its biggest gain since 2002 in one of the strongest signs yet that the housing recovery is gaining traction.

Fatty acids are produced by splitting oils or fats, generating the fatty acid and a glycerine co-product.

The fat or oil feedstock can be any vegetable oil -- in the US, usually soybean oil; in Europe, typically rapeseed oil -- tallow fats, yellow grease and some other greases.

($1 = €0.78)



By: Leela Landress
+1 713 525 2653



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