US Q1 glycerine contracts roll over amid balanced supply, demand

07 January 2010 17:02  [Source: ICIS news]

HOUSTON (ICIS news)--US glycerine contract prices for the first quarter settled at a rollover amid a relatively balanced supply and demand scenario, sources said on Thursday.

Contracts for both vegetable- and tallow-based glycerine remained at 28-45 cents/lb ($617-992/tonne or €426-684/tonne) FOB (free on board) midwest, buyers and sellers said. Pharmaceutical grade glycerine prices stayed at 50-60 cents/lb FOB midwest.

Pricing remained in a wide spread as some parties were willing to pay a premium for what they perceived as secure supply. This marked the third consecutive quarter for current contract price levels. 

But the market was already poised for change, sources said. With biodiesel production ground to a halt over government delays in extending subsidies to the industry, the supply of crude glycerine is expected to drop dramatically, raising costs for glycerine refiners.

There was also the question of whether glycerine producer Archer Daniels Midland (ADM) would, in fact, start its large renewable propylene glycol (PG) plant during the quarter. If the plant does start, and the company decides to continue its plan to use crude glycerine as a feedstock, market players estimated glycerine supply would tighten even further.

ADM did not immediately return calls asking for specifics on the plant’s capacity or expected start-up date.

A tallow glycerine producer said it thought spot glycerine prices could rise by as much as 10 cents/lb within the coming weeks if biodiesel production does not restart.

Major US glycerine producers include P&G, ADM, Cargill and Vantage Oleochem. Major buyers include Carpenter, Colgate-Palmolive and Bayer. 

($1 = €0.69)

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