AFPM ’19: US Q2 mid-cut fatty alcohol contract offers begin

HOUSTON (ICIS)–US C12-15 mid-cut fatty alcohol contract offers for the second quarter are emerging heading into this year’s International Petrochemical Conference (IPC).

Contract offers for natural and synthetic mid-cut alcohol are slowly coming into the market, with discussions picking up as the month progresses. Negotiations will take place during March, with settlements typically finalising across the month.

Early price direction for the mid-cuts is soft, but no settlements have completed as offers are just emerging.

Fatty alcohol contract offers and negotiations are conducted on an account-by-account basis, with no formal announcements from producers.

Market participant reactions from the recent Palm Oil Conference (POC), held in Kuala Lumpur, Malaysia on 4-6 March were overall relatively neutral.

The POC is well regarded as an early indicator for feedstock prices, which in turn are key for fatty alcohol producers gauging potential pricing for the year.

Sources said a key factor for 2019 is the ample inventory conditions for crude palm oil (CPO) and for alcohol feedstocks palm kernel oil (PKO) as well as for coconut oil (CNO).

Inventories in one of the primary feedstock production regions exceeds 1m tonnes over the typical high point, pressuring the entire natural alcohol complex in 2019.

The following graph shows mid-cut C12-15 contract price direction alongside the Southeast Asian spot prices on the mid-cuts.

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

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.

Natural fatty alcohol producers include Procter & Gamble, Kao Alcohols and Wilmar, among others. Synthetic producers in the US are Shell and Sasol.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Judith Taylor