Amidst Weak Demand, Fatty Alcohol Prices Progress Southward Toward the Q2-End

Hamburg, Germany: The moderate demand from the downstream Surfactant and Detergent industries and ample availability of upstream Palm Oil has been responsible for the downshift observed in the price realizations of Fatty Alcohol in the European market. Despite a successive interest rate hike by European Central Bank, the high inflationary pressure still has been impacting the purchasing power of the surfactant and detergent industries, the major consumers of Fatty Alcohol. The manufacturers have been opting for price cuts foreseeing the narrowing Fatty Alcohol market outlook.

According to the financial result released by one of the leading market players Galaxy Surfectant, a decline of approximately 10.4% has been observed in the total income in the quarter ending March 2023 compared to the previous quarter. The ChemAnalyst database has shown that the prices of Fatty Alcohol were settled within the range of USD 2100-2000 per ton on a FOB basis. Moreover, on the input energy front, Europe's largest economy seeks to secure its gas supply following Russia's suspension of deliveries. Market sources have reported that Securing Energy for Europe (SEFE), a state-controlled enterprise, has entered into a 20-year agreement with Venture Global LNG to import 2.25 million tonnes of liquefied natural gas (LNG) per year from Venture Global's third project, CP2 LNG. The deal aims to cater to the needs of end-use businesses and avoid dependence on other countries.

Furthermore, the continuation of the downtrend in the USA was mainly attributed to weak procurement from the terminal market of Fatty Alcohol. The declining freight charges and a slowdown in demand from the downstream surfactant and Detergent industries have prompted the manufacturers to reduce their offers to stimulate new shipments. The overflowing inventories of Palm Oil in the key manufacturing nations, Indonesia and Malaysia, have also inflicted the prices of upstream Palm Oil on the downside, weakening the cost support for its downstream derivatives, including Fatty Alcohol. Furthermore, as Federal Reserve Chairman Jerome Powell indicated that two additional rate hikes are planned for this year to control the sticky inflation, market sentiment for Fatty Alcohol was dented. On the other hand, in India, despite solid demand for fundamentals from the downstream Surfactant and Detergent industries, the prices of Fatty Alcohol have remained on the lower end on the back of lower upstream Palm Oil costs.

According to the pricing intelligence of ChemAnalyst, the prices of Fatty Alcohol might sustain their bearish run in the European market in the forthcoming weeks in the wake of average demand fundamentals. Moreover, in the domestic region of Indonesia and Malaysia, the likelihood of a strong El Nino is anticipated to bring hotter and drier weather, impacting the production of upstream Palm Oil.