16 October 2013 23:59 [Source: ICIS news]
LONDON (ICIS)--Fourth-quarter contract negotiations have now concluded in the European fatty acids market, with palm-based fatty acids rolling over and tallow-based fatty acids increasing from third quarter levels, sources said on Wednesday.
Both grades of palm-based fatty acids remained stable from Q3 levels, with palm stearic acid settling at €850-950/tonne ($1,149-1,284/tonne) FD (free delivered) NWE (northwest Europe), and palm oleic acid settling at €1,100-1,200/tonne FD NWE.
Although palm feedstock values declined throughout the early part of the third quarter, they then increased towards the latter part resulting in very little change to palm feedstock pricing over the quarter and stable palm-based fatty acid prices in Q4.
By contrast, both tallow fatty acid grades increased in price, owing to tightening availability of tallow feedstock material.
Tallow oleic acid was concluded at €1,100-1,200/tonne FD NWE, an increase of €50/tonne on the low end from the third quarter.
Tallow stearic acid concluded at €900-1,000/tonne FD NWE, €50/tonne higher on both the high and low end from third quarter levels.
A few deals took place outside of the above ranges, however, these were outside of the widely agreed consensus.
Sources note lower levels of tallow feedstock being made available to oleochemical producers, 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.
One producer noted an increase of €40-50/tonne to raw tallow since the previous quarter, and was able to pass these increases onto its customers as a result.
With a narrowing of the price spread between palm and tallow-based fatty acids, suppliers anticipate that buyers may switch between the two grades, opting to purchase the most competitively priced option during the next quarter.
($1 = €0.74)
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