17 October 2007 23:59 [Source: ICIS news]
LONDON (ICIS news)--European fourth-quarter refined glycerine contracts settled between €650-850/tonne ($923-1,207/tonne), up €160-320/tonne on the back of increasingly tight supply, buyers and sellers agreed on Wednesday.
Contracts were assessed at €650-850/tonne for vegetable material and €600-800/tonne for tallow, on a FD (free delivered) NWE (northwest ?xml:namespace>
Numbers at the lower end of the range tended to represent business concluded early in discussions, before spot prices began their upward spiral, said buyers and sellers.
“The broad spread is a natural result of a short market,” said one buyer.
Although representing a dramatic shift in prices, up 33-60%, contracts did not reach the historic highs of 2003, where second-quarter contracts hit €1,140-1,240/tonne FD NWE.
Conditions look set for a similar situation in 2008, however, according to some sellers.
Discussions for first-quarter 2008 business had already begun according to some buyers and sellers. Although clearly still in their initial stages, price ideas of well over €1,000/tonne have been mooted.
“These numbers could be present through 2008,” said one seller.
The current insecurity which has shrouded the co-produced biodiesel market has added to anxiety. Against this background buyers were increasingly seeking to secure longer term contracts, said one seller.
“There has been a sense of panic among purchasers,” said a buyer.
Material has been extremely limited, resulting in a near non-existent spot market. The last spot business heard done was for two truckloads at €1,100/tonne FD NWE, and higher numbers have been reported.
Some buyers felt that spot numbers heard in the market, often around €1,400/tonne FD NWE, were not entirely based on reality.
“It is as if sellers are throwing numbers around and seeing what sticks”, said one.
It was the rapid acceleration of prices which threw most customers, said another.
“These aren’t the highest prices we have seen, but when you see plants closing because they don’t have any material, the panic seems justified,” the source added.
Prices for rapeseed and vegetable oil feedstocks have been extremely high and rising rapidly. This has combined with tightening market fundamentals resulting in rocketing prices.
Product remained extremely tight in
($1 = €0.71)
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