12 March 2009 16:08 [Source: ICIS news]
By Rachel Howat
Recent price increases for refined glycerine have been driven by tightness in the crude glycerine market.
Market participants attributed the shortage of crude glycerine in the European market to the cutback in biodiesel production, particularly in
European-produced biodiesel has been priced out of the market by cheaper imports, mainly originating from the
In addition, overall demand for biodiesel dropped to government-mandated levels after the fall in crude oil prices towards the end of 2008 ended incentivised blending, which led to the idling of substantial rapeseed methyl ester production in
Crude gylcerine prices have been hit hard by the burgeoning biodiesel market, which flooded the market with product.
Glycerine is a by-product of the esterification process in which oils are turned into biodiesel.
Tightness in the crude glycerine market was the catalyst for price rises in refined product, sources said. Some suppliers said that other competitors did not have any available product and, as a result, prices were rising.
A French trader said that price levels for 80% vegetable-based crude glycerine had risen by as much as €100/tonne ($128/tonne) in a week.
Another trader said that the same grade of crude glycerine was at a price of €180-200/tonne FD (free delivered) NWE (northwest
However, there was some dissent among market sources, with one buyer saying that producers were attempting to capitalise on the shortage of material and holding out for prices which a month ago would have been considered unrealistically high, and might still not be achievable. This was expected to impact refined pricing.
The recent announcement by the European Commission that US imports of biodiesel would be subject to duty to counteract the blending subsidies which had been picked up in the
“Quite a lot of German producers have not been producing at all,” said Johannes Daum of the German Biofuel Industry (VDB).
“We are happy that measures have been announced against the importation of
While the future looks brighter for biodiesel, any resurgence in production would likely recreate the conditions that led glycerine prices to take such a tumble in mid-2008.
At that time, contract prices for vegetable-grade glycerine fell almost 40% from €1100-1200/tonne in the second quarter to €650-800/tonne FD NWE in the third quarter.
($1 = €0.78)
Dan Horlock contributed to this article
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