| Buying sentiment in Asia cautious on softer feedstock prices, uncertain demand |
Asian fatty acid prices were stable-to-soft, as the low feedstock palm oil prices and the uncertain demand outlook for the first quarter of 2013 have dampened buying sentiment.
Palm oil prices softened further in the week ended 12 December and market participants are cautious about the near-term market outlook as the southeast Asian producers will be starting 2013 with high palm oil inventories.
The bearish performance of the upstream market during the week led fatty acid buyers in Asia to minimise their purchases of January and early February-loading cargoes.
In China, there has yet to be any signs of large-scale restocking activities before the Lunar New Year holidays on 9-15 February. Most Chinese distributors and end-users said it is difficult for them to gauge if the downstream markets will see a seasonal pick-up in the post-holiday orders, given the uncertain macroeconomic situation.
On the supply front, the sentiment remains bearish for producers with high C14 myristic acid stocks.
Sellers continue to face difficulty in moving their C12 myristic acid shipments, as buyers are delaying their purchases on expectations of a further price fall. End-user requirements have also declined because the record-high prices at above $4,000/tonne FOB SE Asia earlier in the year may have led some companies to adjust their product formulations. In addition, the downstream isopropyl myristate (IPM) sector has continued to perform poorly.
Offers of C12 lauric acids, a co-product of C14 myristic acids during the fractionation of palm kernel (PKO) oil, were heard at a wide price range during the week. Sellers with a significant imbalance in their stock levels for C14 myristic acids and the better-performing C12 lauric acids sought prices at or above the high end of the published range. However, these offers received little buying interest because of falling PKO prices. Buyers were able to obtain more competitively priced alternatives from other producers.
The February crude palm oil (CPO) futures contract on the Bursa Malaysia Derivatives Exchange fell to ringgit (M$) 2,238/tonne on 12 December, from the closing level at M$2,287/tonne a week ago. Prices were weighed down by Malaysia’s high palm oil inventories, which rose for a fourth consecutive month to a record 2.56m tonnes in November.
Prices of palm oil products in Malaysia’s cash market were similarly lower at midday on 12 December, compared with prices a week ago (see Feedstock prices).
Prices of heat-stable C8 caprylic acids were assessed as unchanged because of tight supply. Offers were heard largely at $3,600-3,800/tonne FOB SE Asia for first-quarter shipments.
Offers of heat-stable C10 capric acids were heard at up to $1,400/tonne FOB SE Asia, but deals were done largely at $1,300-1,350/tonne FOB SE Asia for January and February shipments. Demand was said to be slow.
Prices of blended C8-C10 caprylic-capric acids were supported by the limited availability of cargoes for loading during the first quarter. Some quantities were heard booked at $2,600-2,700/tonne FOB SE Asia.
C12 lauric acid prices fell at the low end of the range, in line with offers.
Offers were largely at $960-1,000/tonne FOB SE Asia for January loading cargoes. Some deals, however, were heard done at lower prices of $930-940/tonne FOB SE Asia.
The prices were unworkable for producers saddled with high C14 myristic acid stocks. Such sellers sought prices at $1,020-1,050/tonne FOB SE Asia, though buying interest was lukewarm.
In China, offers were at $980-1,070/tonne CFR China for January loading cargoes. Demand was low as softer PKO prices led buyers to postpone or reduce their purchases.
The prices of locally produced C12 lauric acids in China were at yuan (CNY) 7,600-7,800/tonne EXW in the week.
Offers to India were at $980-1,080/tonne CFR India for January loading.
In southeast Asia, a deal was heard done at $950/tonne CIF SE Asia.
Ample supply and persistently weak downstream demand weighed on the prices of C14 myristic acids.
The most competitive offers were at $2,100-2,300/tonne FOB SE Asia for end-December and January shipments. Prices at below $2,100/tonne FOB SE Asia could not be unconfirmed.
Several sellers targeted $2,500/tonne FOB SE Asia, but the price was unworkable for most buyers.
In China, an offer at $2,200/tonne CIF China did not interest buyers.
Prices for C16 palmitic acids were unchanged on the back of tight supply and largely healthy demand.
Offers were heard at $1,000-1,100/tonne FOB SE Asia for January and early February loading cargoes, with transacted prices largely at $1,000-1,050/tonne FOB SE Asia.
Some deals were heard done at $980/tonne FOB SE Asia, but most buyers said it was difficult to get offers at below $1,000/tonne FOB SE Asia.
Prices for C18 oleic acids were range-bound, in line with deals and discussions heard at the published range.
C18 triple-pressed stearic acids (TPSA) prices were dragged down by a decline in feedstock palm stearin costs.
Several producers offered their TPSA cargoes at $950-980/tonne FOB SE Asia for January loading, with deals done at these prices.
There were also more competitive offers heard at $930-940/tonne FOB SE Asia in certain markets such as China.
Shipments to China were offered at $950-980/tonne CFR China for January loading versus buying ideas at $920-930/tonne CFR China.
Domestic prices in China were unchanged at CNY7,150-7,300/tonne EXW in the week.
Demand of TPSA in India was weak ahead of the start-up of a new local facility.
C18 rubber-grade stearic acid (RGSA) prices were assessed as stable-to-soft, in line with the drop in TPSA prices.
| Product | Month | Delivery | 12 December | 5 December | Change |
| CPO | December | DEL, south Malaysia | M$2,060 | M$2,090 | -M$30 |
| PKO | December | DEL, south Malaysia | $659 | $696 | -$37 |
| Palm Olein | December | FOB, Malaysia | $755 | $775 | -$20 |
| Palm Stearin | December | FOB, Malaysia | $700 | $730 | -$30 |
| PFAD | December | FOB, Malaysia | $590 | $630 | -$40 |
All prices are on per tonne basis.
From southeast Asia to China/South Korea: $10-30/tonne
From southeast Asia to Japan: approximately $30/tonne
($1 = CNY6.25)
($1 = M$3.06)
This week on ICIS at www.icis.com:
12 Dec 12 10:37 Palm oil freight rates to China, India continue to rise
11 Dec 12 08:06 China’s October output for petrochemical products largely rises
10 Dec 12 07:31 China’s industrial output rises 10.1% year on year in November
