Focus story by Angeline Soh
SINGAPORE (ICIS)--Spot drummed fatty alcohol ethoxylates (FAE) prices in Asia may gain the second half of the year on expectations of better demand, backed by economic improvement in the key China market, market sources said on Friday.
On 25 June, FAE prices in China’s domestic market were assessed at yuan (CNY) 12,500-12,600/tonne ($2,013-2,029/tonne) EXWH (ex-warehouse), down by CNY800/tonne or almost 6% from end-February, according to ICIS data. The prices last week were equivalent to $1,600-1,620/tonne on a CIF (cost, insurance and freight) China.
Manufacturing activities in China improved in June, with its purchasing managers’ index (PMI) for the month rising to a six-month high of 51. Investment bank HSBC released its final June PMI reading for China at 50.7, the first time in six months that the number crossed the 50 threshold that indicates expansion.
Market players are upbeat that China’s targeted growth stimulus measures are working and that it would translate to higher demand for FAE.
“The credit flows are much smoother, after the stimulus measures,” said a Taiwan-based trader in Mandarin. “End-users are able to buy cargoes more easily,”
Alcohol ethoxylates have applications in home and personal care, agrochemicals, textile, lubricant and paper industries. They can be used directly as surfactants or as feedstock for the production of sodium lauryl ether sulphate (SLES) – a key ingredient in natural surfactants.
“The FAE market is typically strong in the third quarter. However, unless the import material can be competitively priced, the trades will still be limited to the domestic arena,” a China-based trader said in Mandarin.
Warmer weather in July to September ushers in increased construction and building projects that typically boost consumption for downstream cleaning products.
The better outlook for FAE, however, may not extend to the import market given availability of cheaper material that can be obtained domestically, with shorter delivery period, industry sources said.
Offers for imported FAE stood at $1,720-1,800/tonne CIF China this week, higher by about $150/tonne compared with domestic prices on 25 June, market sources said.
The price gap is attributed to higher cost of raw material ethylene oxide (EO) of imported material, they said.
Some producers in southeast Asia have ventured beyond their usual markets of China and southeast Asia to alternative markets such as Australia, Japan and Turkey. Other producers chose to concentrate on other products as their ethoxylation plants can produce different types of ethoxylates.
($1 = CNY6.21)Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections