FocusUS glycerine supply segments divide

23 May 2008 20:18  [Source: ICIS news]

By Judith Taylor

HOUSTON (ICIS news)--Supply conditions are increasingly divergent between vegetable and tallow US refined glycerine segments, several producers and distributors said on Friday.

Behind this emerging scenario is tight supply in the tallow glycerine segment, caused by a drain on the fats/grease feedstock markets from biofuels and signs of rising demand from technical applications.

“Tallow refined glycerine just remains very tight right now,” one distributor said.

Although tallow and vegetable glycerine can go into the same end-uses unless the veg-product is kosher, price differentials of 20-30 cents/lb ($441-661/tonne or €282-423/tonne) are pushing buyers to get tallow, market sources said.

Two tallow glycerine producers confirmed sold-out positions through June, with distributors in agreement that spot loads were difficult to secure.

“We’re booked about six weeks out on orders,” a producer said, adding that buyers were actively seeking material.

The tallow glycerine situation is contrasted by increasing supply in the vegetable glycerine segment where shipments from Europe are beginning to balance previously tight conditions, traders said.

Producers and other suppliers agreed the veg-glycerine supply factor was improving, but most stopped short of calling it balanced.

“I’m just not seeing it out there yet,” one supplier commented, but agreed the tightness that drove prices up over 15 cents/lb in the third and fourth quarters of 2007 was abating.

May vegetable refined glycerine contracts were assessed in a 90-110 cents/lb range, according to global chemical market intelligence service ICIS pricing. Tallow contracts ranged 75-85 cents/lb.

Tallow spot prices were assessed this week in a 76-85 cents/lb spread, but late week inputs on the range were moving up by about 4-5 cents/lb, according to suppliers.

US refined glycerine producers include Procter & Gamble, Uniqema, Dial, Cognis and Cargill, among others.

($1 = € 0.64)

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By: Judith Taylor
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