OUTLOOK ’19: US C12-15 mid-cut fatty alcohols show mixed prospects

Judith Taylor

07-Jan-2019

HOUSTON (ICIS)–The US C12-15 mid-cut fatty alcohols are entering the New Year of 2019 with mixed perspectives on both prices and supply in the first quarter.

US fatty alcohol buyers and sellers are in the midst of first-quarter 2019 contract negotiations, with freshly emerging offers and some settlements taking place at mid-December.

Offers and early settlements for the mid-cut alcohols are emerging at lower-than-expected levels, driven by uncertainty in the feedstock sector and mixed viewpoints within the market about supply conditions going into the New Year.

Market participants said mid-cut price negotiations are edging down in spite of some expectations that the first-quarter prices could move up.

Underpinning this trend toward potentially moderated first-quarter mid-cut prices are fluctuations and uncertainties in feedstock palm kernel oil (PKO) and coconut oil (CNO).

US buyers say there are significantly higher inventories of crude palm oil (CPO) and PKO than anticipated in the Asian markets, particularly in Malaysia. This factor plus ready supply of natural mid-cut shipments into the US market has eased US buyers’ tensions about sufficient requirements for the first quarter.

While US sources claim Asian natural alcohol supply is ample, global producers counter that Asian supply is short, driven by cutbacks in operating rates and a supply crunch in Europe.

Buyers and sellers said US mid-cut supply is currently not affected by outages and pinched supply discussed in the European market.

Developments may take place at some point in the upcoming year that brings about US supply concerns; however, there is no effect observed at this time and none expected for the first quarter.

Synthetic alcohols remain in tight supply on the mid-cuts and likely to remain in this condition throughout the first quarter, mirroring several previous quarters.

Contract levels on the synthetics often lodge about the middle of the C12-15 assessment. The assessment takes natural and synthetic prices and trends into account. It can happen that natural alcohol supply and feedstock fundamentals lean one direction and the synthetics in the opposite direction because the feedstocks and production methods are significantly different.

This situation is a potential in the first quarter of 2019.

In the US, fatty alcohol market is a net-importer market for the natural alcohols. Contracts are primarily on a quarterly basis with no formal announcements of price changes. Sellers take the contract negotiations on an account-by-account basis, with settlements finalising scattered throughout the negotiations.

Synthetic alcohols may be contracted differently than natural alcohols with quarterly terms involved as well as longer-termed contracts.

Natural fatty alcohols are typically made by an oleochemical process using PKO or CNO as feedstock. Synthetic alcohols are the same fatty alcohol molecule but produced by processes using ethylene as feedstock.

The key end-use for mid-cut alcohols is surfactants. This class of chemical products comprise numerous cleaning and detergent uses, ranging from household agents to oilfield applications.

The C12-15 mid-cut alcohol ICIS quote includes C12-14 natural alcohols and mid-cut synthetic alcohols because the range seeks to address both natural and synthetic alcohol prices.

The fourth-quarter ICIS range for the C12-15 mid-cut alcohols is 80-89 cents/lb on bulk delivered basis.

The following graph shows US C12-15 contract price direction in 2018.

ICIS Editorial Chart goes here

Focus article by Judith Taylor

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