RBD palm stearin remains overpriced to olein on strong demand and tight supply
RBD palm stearin remain at a premium to olein for the fifth consecutive week but narrowed to $14 from 26.50 in the week prior after stearin weekly average fell by $5 to settle at $881 per tonne while olein was up $7 to $867 per tonne. Stearin has been trading above olein between $7 to 30 since Apr 24, reflecting the tight supply for stearin downstream product amidst strong demand. Palm olein generally trades $15 to 60 premium to stearin but the spread narrowed steadily since April and show no sign of olein flipping into premium. Stearin which is a by-product from fractionation of RBD palm oil is produced in a smaller quantity i.e. about 25% of the volume while the main product from the fractionation RBD palm olein makes up the bulk of the volume of near 70%. Stearin is a widely used hardening agent in beauty products but also in manufacturing of fat-based food in the bakery, shortening and margarine industries. In addition palm stearin is also used as a replacement of cocoa butter which is currently trading at record high prices. Indonesian stearin exports in April were 9.5% higher compared with March at 142,026 tonnes, according to ITS data, driven by increases to most destinations. Stearin exports to the African continent rose the most, nearly tripling from March to 4,520 tonnes – exports to Kenya were up to 1,400 tonnes and 1,000 tonnes to Tunisia from zero in April. In Asia, exports to Malaysia were up to 13,000 tonnes from zero which offset the 14% decrease to South Korea. Indonesia also exported 4% more stearin to Europe, driven by greater shipment to the Netherlands. Meanwhile, Indonesia’s export of the main product from fractionation of RBD palm oil, palm olein saw a 7% fall from March to 690,501 tonnes in April, with outbound cargoes to China lower by 7.9% to 105,000 tonnes and falling sharply by 61.3% to 44,000 tonnes to Bangladesh and by 49.5% to 81,508 tonnes to Paki-stan.
Source: POA