European mid-cut fatty alcohol prices for the second quarter have dramatically increased from first-quarter levels, sources said 7 May.
Second-quarter contracts settled at €1,600-1,700/tonne FD (free delivered) NWE (northwest Europe), an increase of €220/tonne on the low side and €225/tonne on the high side.
Some deals were also reported taking place either side of this range, but they were outside of the widely agreed consensus.
Feedstock palm kernel oil values (PKO) significantly increased during the first quarter and the second quarter, with severe dry weather in southeast Asia, raising fears of lower yields from the region. Although rainfall has since arrived, PKO values remain at high levels. This has resulted in significantly higher offers from fatty alcohols producers.
Second-quarter discussions had previously stalled with buyers and sellers unable to agree on an acceptable price for mid-cut material.
Although most buyers have now concluded second-quarter business, some have opted to cover their requirements on a month-to-month basis, holding back from covering for the entire quarter in the hope of a decline in prices.
Many sources anticipate extra material soon being made available to the market from Wilmar’s new plant in Rotterdam.
However, with feedstock palm kernel oil prices remaining at high levels, producers are reluctant to significantly reduce their offers.