Palm feedstock price hikes place pressure on Europe fatty acids

06 November 2013 17:34  [Source: ICIS news]

LONDON (ICIS)--Recent increases to palm feedstock costs have led participants in the European market to expect higher palm-based fatty acid prices, sources said on Wednesday.

With activity in the spot market at low levels, many suggest it is currently difficult to gauge where fatty acid prices currently are.

One producer said that the upwards movement in the palm oils markets would suggest that palm oleic prices should currently be at €1,300/tonne ($1,757/tonne) FD (free delivered) NWE (northwest Europe).

However, since the conclusion of fourth-quarter contracts a few weeks ago, demand for product remains weak. The producer believes it would therefore be “difficult to get a buyer to pay over €1,200/tonne FD NWE for palm oleic acids.”

Lower palm stearic acid prices continue to be offered by Asian producers into Europe, and despite increasing feedstock costs, European-based producers remain under pressure to keep prices at the fourth-quarter levels quoted above.

Sources believe both grades of tallow-based fatty acids to be at around €20-50/tonne higher than their palm-based alternatives.

Although palm-based fatty acids currently remains the cheaper option, many in the market believe that this may soon change, with firming palm feedstock costs continuing to place upward pressure on prices.

($1 = €0.74)

By: Neha Popat
+44 208 652 3214

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