16 July 2007 07:08 [Source: ICIS news]
By Jeremiah Chan
SINGAPORE (ICIS news)--Asian spot prices of refined glycerine sold in drums have hit the $900/tonne FOB (free on board) southeast (SE) Asia mark – a three year high – on the back of healthy demand and tightening supply, traders and producers said on Monday.
Glycerine was last traded at $900/tonne FOB in April 2004, after which prices plummeted to as low as $580/tonne in early 2006 due to a glut of crude glycerine in the region from soaring soap, fatty acid, fatty alcohol and biodiesel production.
With feedstock crude palm oil (CPO) prices falling to an average of ringgit (M$) 1,394/tonne ($405/tonne) FOB ?xml:namespace>
However, by-product crude glycerine has since all but disappeared from the Asian market as oleochemical and biodiesel producers cut production as CPO prices surged.
Crude glycerine offer levels have risen as high as $350/tonne FOB SE Asia, more than double the price just six months ago.
Oleochemical producers found themselves squeezed by ever-tightening margins when CPO prices shot above M$2,200/tonne in April 2007 and cut production levels as demand waned for material at the high prices.
Likewise, biodiesel production has been in the doldrums, as high feedstock values raised questions on whether it would be economically feasible to produce palm methyl esters.
Crude glycerine output from biodiesel plants is about 10% of the biodiesel produced.
Despite the available glycerine refining capacities in the region, there simply isn’t sufficient crude glycerine to distil, traders and producers said.
Refined glycerine prices have been on an uptrend since early April 2007 when drummed glycerine was sold at $590-620/tonne FOB SE Asia.
Prices have since surged by $300/tonne, and the material was traded at $880-900/tonne FOB SE Asia, according to global chemical market intelligence service ICIS pricing.
Demand looks set to grow in the near future, as new applications are rapidly being developed for the commodity. Glycerine is increasingly being used for epichlorohydrin as well as propylene glycol production.
Dow Chemical recently announced plants to build a 150,000 tonne/year glycerine-to-ECH plant in
Propylene glycol consumption is set to grow by 3-7% annually, and is presently produced from propylene oxide.
Meanwhle, speculative buying from traders looking to make a quick buck had contributed to the rapidly escalating prices, as expectations of higher prices brought about scrambles for the commodity.
“Anybody who knows how to spell [the word] glycerine is enquiring on availability [of cargoes]. Everybody knows it’s a hot commodity,” a senior executive of a southeast Asian oleochemical major said.
Major glycerine producers in
($1 = M$3.44)
Anu Agarwal contributed to this story.
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