26 September 2007 17:52 [Source: ICIS news]
By Adal Rafiq
LONDON (ICIS news)--Prices for European glycerine were still on an upward march as spot volumes continued to shrink, market sources said on Wednesday.
“There is no real upper limit on spot prices. Buyers are accepting any number. The last business we did was at €1,000/tonne ($1,408/tonne) EXW (ex-works) for a single tank car,” said one producer.
“There is certainly nothing below €750/tonne FD (free delivered) NWE (northwest ?xml:namespace>
“For smaller, drum volumes, buyers can expect to pay €1,400/tonne FD NWE and above, but material is so tight, this is difficult to fulfil,” said the producer.
Globally, glycerine prices have been on the rise, with Europe lagging slightly behind Asia and the
“You can expect the glycerine market to simply focus on contract business for the near future. The spot market is all but gone”, said an industry source.
The reasons appeared simple, said sources: prices for rapeseed and vegetable oil feedstocks were already high and rising rapidly. This has combined with tightening market fundamentals resulting in rocketing prices.
Product remained extremely tight in
Producers reported enquiries from co-producers for swap deals being rebuffed due to the lack of availability.
There was also some focus on the possible implications of a mooted rise in German taxes on biodiesel, a co-product of glycerine.
From 1 January 2008, taxes on biodiesel could rise to €0.15/tonne from €0.06/tonne.
“Profitability at current levels was bad enough,” said one producer. “But if the rise goes through, margins will be squeezed even more. It will make a bad situation even worse”, the source added.
A clearer picture of the German government’s intentions was expected to emerge over the next two weeks, said another source, and this could prove pivotal.
According to one seller, “When we give them a number, buyers say to us that they can find lower priced material elsewhere, but within a couple of days, they are forced to come back to us. There is no material out there.”
Price was no longer an issue for buyers, said one broker, adding that the only concern was for securing volumes. Business at around €1,000/tonne FD NWE have already been mooted by some sources.
“This looks like a mental barrier for some buyers,” said one producer. “But if you look at historical prices it is just the market coming back round”, the source added.
In February 2003, glycerine prices hit €1,250-1,300/tonne FD NWE, according to global chemical market intelligence service ICIS pricing.
“It may be a barrier for buyers,” said a source, “but it is a very attractive looking target, if you have material”.
($1 = €0.71)
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