FOCUS: SE Asia biodiesel brings glycerine glut

22 September 2006 08:51  [Source: ICIS news]

By Shibu Itty Kuttickal

SINGAPORE (ICIS news)--Southeast Asia, like Europe, could see a glut in glycerine, a byproduct in biodiesel production, as many biofuel projects are under way, producers and traders said on Friday.

Around 500,000 tonnes/year of crude glycerine from biodiesel projects in Malaysia is expected to come on stream in 2007, they added. This will bring the country’s total capacity to over 700,000 tonnes/year. Each biodiesel plant can produce about 10% of glycerine.

A glut in the European crude glycerine market, also caused by biodiesel production, could hit Asia soon as the cheap material is expected to reach the market in October, traders said.

Refined glycerine prices were hovering around $600/tonne FOB Southeast Asia in August, a fall from the $800/tonne levels in June.

Some refined glycerine producers were heard seeking long-term deals to sell the product at sub-$500 levels. However, they were still hoping that more applications could be found for glycerine.

"Many toothpaste companies have started substituting refined glycerine for sorbitol," said UR Unnithan, executive director of Carotino, a biodiesel producer in Malaysia. He added that "cutting-edge" research could lead to more applications for glycerine in the future.

Carotino plans to start up its second 120,000 tonnes/year biodiesel plant in Pasir Gudang in Johor state, in 2007. It has another 60,000 tonnes/year unit at Pasir Gudang.

Anhar Suki, director engineering of Malaysia’s Golden Hope Plantations, said there could be an oversupply of glycerine "in the short term".                                       

"But there are numerous uses of glycerine which have not been commercialised because of supply issues. For example, plants to manufacture epichorohydrin (ECH) and polyols could use large quantities of glycerine. I am confident that the new applications for glycerine will be put on stream soon," he added.

However, a Hong Kong trader said that unless the new applications come out fast enough, prices would tumble further.

Like Europe, Asia will also need to focus on improving glycerine refining capacity to avoid the glut in crude material, producers and traders said.

ICIS news previously reported that Europe faces the challenge of an oversupply of crude glycerine, due to a lack of glycerine refining capacity and an increase in biodiesel production and oleochemical processing.

By: Shibu Itty Kuttickal
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