US glycerine Q4 contracts roll over amid confused outlook

07 October 2009 18:41  [Source: ICIS news]

HOUSTON (ICIS news)--US vegetable and tallow glycerine contracts for the fourth quarter rolled over from the preceding quarter as the market remained calm before coming storms, buyers and sellers said on Wednesday.

Market sources said they expected a staid fourth quarter, with incremental sales growth, stable feedstock costs and balanced supply, a scenario that led to a rollover in contract prices.

Vegetable and tallow glycerine contracts were assessed at 32-50 cents/lb ($705-1,102/tonne or €479-749/tonne), unchanged from the third quarter. Pharmaceutical glycerine prices dropped 10 cents/lb, to 55-65 cents/lb, as the market fell in line with the previous quarter’s veg and tallow glycerine prices.

“I don’t see much change,” one large-volume veg and tallow glycerine buyer said. “There’s no reason to change.”

The market was still two-tiered, split between transactions done in the mid-30s and some done in the mid-to-high 40s. Buyers at the higher levels are paying premiums for what they perceived as secure supply in case of a sudden surge in demand, sources said.

The market lull could break in the first quarter of 2010, with the demand question clouding the forecast.

Buyers and sellers debated how the economy would look going into the new year, whether low-priced European glycerine would hit US shores, and how Archer Daniels Midland's (ADM) scheduled start-up of its 100,000 tonne/year renewable propylene glycol (PG) plant in Decatur, Illinois, would impact the market.

The PG plant, expected to start up in the first quarter, could pull large amounts of glycerine from the market, depending on the amount of PG that ADM can sell.

“There’s a lot of confusion with what ADM is doing, etc.,” the buyer said. “No one knows what the market is doing.”  

($1 = €0.68)

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By: Ben Lefebvre
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