SINGAPORE (ICIS News) Strong demand, along with some cost-push pressure from volatile prices of feedstock palm

oil, will likely send fatty acid prices higher in Asia next month, industry sources said on Friday. Fatty acids, which are fractionated from derivatives of palm oil, have various downstream applications such as plastics and cosmetics. High feedstock costs were constraining supply at a time when demand for fatty acids was traditionally at its peak, market sources said. Most Malaysian producers are currently sold out until June and July for C12-14 acids, C18 chains are tight in supplies now, said a Malaysian trader. Some buyers had started to stock up on inventories in anticipation of higher prices in the coming weeks, market sources said. Demand for C12-18 acid groups are strong, and if palm oil prices go up, acid prices will have to go up as well, an Indonesian producer added. Over the past month, prices of C12-18 acid groups increased at an average of $20-100/tonne (15-76/tonne) FOB (free on board) southeast Asia, while those of C8-10 acids were unchanged, based on data from global chemical market intelligence service, ICIS pricing. Crude palm oil (CPO) prices, meanwhile, were rising due to tight supply as the prolonged dry spell was adversely affecting harvest at major plantations in Malaysia and Indonesia. CPO futures traded on the Bursa Malaysia decreased by M$33/tonne ($10.3/tonne) at M$2,591/tonne from end-March to M$2,558/tonne on 28 April, although the past three months saw a clear uptrend in values. CPO prices rose about 6% from end-January, based on data available from the Malaysian stock exchange. The prices were moving in tune with the prediction of Dorab Mistry, an official at Indian major oleochemicals producer Godrej International and widely acknowledged as an industry expert, that palm prices would continue to rise in the second quarter, said a Malaysia producer. Mistry spoke about his bullish prospects on palm oil prices at a recent industry conference in Dubai, the producer said. Some market players, however, were not convinced that fatty acids prices would head north, given ample supply. Malaysian producers may be sold out till June-July, but Indonesia, Thai, Chinese and Indian producers are running at full [capacity], said a Singapore-based trader of fatty acids. ($1 = 0.76 ; $1 = M$3.19) Read John Richardson and Malini Hariharans blog Asian Chemical Connections To discuss issues facing the chemical industry go to ICIS connect