Biodiesel boom fuelling glycerine oversupply - F&S

08 December 2006 10:30  [Source: ICIS news]

LONDON (ICIS news)--The growth of the global biodiesel industry has created an oversupply in the crude glycerine market which will result in declining revenues and spiralling prices, industry analysts said on Friday.

 

In a Frost & Sullivan (F&S) report, Niranjana Ganesh and Tejasvini Kulkarni said producers need to expand glycerine refining capacity and improve the quality of the product in order to prevent decline.

 

The increasing number of biodiesel plants has had a major influence on the glycerine industry since they produce glycerine as a co-product, F&S said.

 

This has contributed to an oversupply of crude glycerine which, along with a declining demand for synthetic glycerine, has led to price erosion.

 

F&S said biodiesel should have a greater degree of quality control over the glycerine it produces as the abundance of impure material contributes to dropping prices.

 

The total market for refined glycerine in Europe was thought to be €188m in annual revenue and 400,000 tonnes in production.

 

F&S said growth in revenue would slow to 2013 when it expects the annual turnover to reach around €260m.

 

The US market is valued at $157.4m where revenues declined significantly over the past five years due to spiralling prices of the refined product.

 

F&S said in 2001 refined glycerine was available at $0.75 to $0.80/pound, compared to $0.35 to $0.50/pound in 2006.

 

The report, released after an F&S briefing on Thursday, added that southeast Asian countries would see the largest growth in the global glycerine market.

 

Indonesia and Malaysia have a large demand for palm oil products, good infrastructure and a large end-user market in China.

By: Mark Watts
+44 20 8652 3214

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