02 October 2013 23:59 [Source: ICIS news]
LONDON (ICIS)--Fourth-quarter contract negotiations in the European fatty acids market are understood to be reaching a conclusion, market participants said on Wednesday.
Sources note lower levels of tallow feedstock being made available to oleochemistry owing to a decline in animal slaughtering rates in Europe.
This, together with an increase in tallow demand from the biodiesel industry, is thought to be maintaining the upward pressure on raw tallow feedstock prices.
A producer said it had now concluded fourth-quarter negotiations with around 90% of its customers, selling tallow stearic acid at €900/tonne ($1,216/tonne) FD (free delivered) NWE (northwest Europe) and tallow oleic acid at €1,150-1,200/tonne FD NWE.
It notes that although tallow feedstock costs had gone up by €40-50/tonne since the previous quarter, it was unable to pass on these increases to its buyers, owing to the competitive palm-based fatty acid prices in Europe.
“I expect a difficult fourth-quarter, with demand at low levels and margins remaining squeezed,” the producer added.
By contrast, another producer said that it has been able to achieve a slight increase from the third quarter - selling tallow oleic acid at €1,200/tonne FD NWE and tallow stearic acid at €1,000/tonne FD NWE for the fourth quarter.
Any outstanding business is expected to be finalised imminently.
($1 = €0.74)
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