Asia FAE market outlook mixed as decline in feedstock costs halts

08 May 2014 08:26 Source:ICIS News

SINGAPORE (ICIS)--Asia’s spot drummed fatty alcohol ethoxylates (FAE) market is experiencing mixed outlooks as the decline in feedstock fatty alcohol costs throughout April comes to a halt, market participants said over the week ended Thursday.

Feedstock costs have a greater impact on FAE prices than downstream market fundamentals, the market participants added.

Prices of feedstock C12-14 fatty alcohols have been stable at $1,800-1,900/tonne FOB (free on board) southeast (SE) Asia since the week ended 30 April, compared with $1,900-2,000/tonne FOB SE Asia in the week ended 5 March, according to ICIS data.

From a macro perspective, China’s recent weak economic conditions appear likely to continue in May, which would impede a price uptrend in the FAE market, many market participants said.

However, southeast Asia-based producers have been facing difficulties in concluding deals in China as they are unable to match the domestic offers.

The domestic FAE market movements in China have been setting the trend for discussions on imports as Chinese producers have the advantages of using cheaper raw material and providing shorter delivery periods.

Chinese domestic FAE prices were assessed at yuan (CNY) 12,800-12,900/tonne ($2,054-2,071/tonne) EXWH (ex-warehouse) in the week ended 7 May, according to ICIS data.

Spot import prices for drummed FAE-7 and FAE-9 were assessed at $1,700-1,800/tonne CIF (cost, insurance and freight) China and $1,850-1,900/tonne CIF SE Asia, respectively, over the same week, ICIS data showed.

Some producers in southeast Asia have switched to selling in alternative markets as their ethoxylation plants can produce different types of ethoxylates. Others have turned to markets beyond China and southeast Asia to deplete their existing cargoes or raw material.

In the meantime, producers are still hoping that FAE demand from the downstream shampoo and shower foam sectors would be boosted by the arrival of warmer weather from May.

By Angeline Soh