Price and market trends: SE Asia soap noodle drifts lower on feedstock cost downtrend

23 June 2014 00:00 Source:ICIS Chemical Business

Prices of soap noodles in southeast Asia fell for the sixth consecutive week, tracking losses in the feedstock palm kernel oil (PKO) markets, industry players said on 13 June.

Standard blend 80/20 soap noodles with 78% total fatty matter (TFM) were negotiated at $850-880/tonne FOB (free on board) SE Asia, down by around $10-20/tonne week on week, according to ICIS data. Prices of the material have declined by more than 9% since 2 May, the data showed.

“Prices of soap noodles have fallen more than the drop in feedstock prices,” said a major producer in Indonesia.

On 13 June, prices of feedstock PKO were at $1,174/tonne FOB Malaysia, down by around $32/tonne from the previous week. Crude palm oil in the cash market declined to $2,400/tonne DEL (delivered) south Malaysia mid-week, before rebounding to $2,450/tonne DEL south Malaysia on 13 June on the back of crude gains.

Price competition is strong among soap noodle producers as some of them dangle lower offers to draw in buyers amid poor demand coming from the downstream soap bar market.

The upcoming Ramadan – the month-long Muslim fasting month – is also slowing down buying activities in key consumption markets like the Middle East, according to market participants. Southeast Asia’s soap noodle market was subdued after a wave of purchasing activities last week, while buyers are on a wait-and-see mode, expecting prices to fall in the coming weeks.

By Daphne Ho