Propylene glycol plant on track, glycerine fears unfounded - ADM

26 January 2010 20:53  [Source: ICIS news]

HOUSTON (ICIS news)--US agricultural giant Archer Daniels Midland (ADM) said on Tuesday it is on track to start its renewable propylene glycol (PG) plant by the end of March, but that the project will not have as big an effect on the US glycerine market as some think.

The Decatur plant in Illinois is scheduled to begin operation by the end of the first quarter, said a company source who requested to remain anonymous because he had not been cleared to talk to the news media.

The plant has a capacity of 100,000 tonnes/year (220m lb/year), according to the company's annual report.

The source said ADM will buy crude glycerine on the open market and then refine it in-house to feed the PG plant, but would only describe the crude glycerine draw as “significant”.

An ADM spokeswoman confirmed the plant was scheduled to start producing in the first quarter but declined to give information on feedstocks.

US glycerine buyers and sellers have said that US prices for the oleochemical will skyrocket once ADM’s PG plant goes online as the operation draws increased amounts of crude and refined glycerine from the general market.

But ADM said those fears are unfounded. The company will buy the necessary crude glycerine from various sources in the EU, South American and the US, limiting impacts in any one area, the source said. 

“We have a strategy to buy crude glycerine wherever we can get it. There’s more than enough glycerine out there,” the source said.

At the same time, ADM will continue to sell refined glycerine into the open market even while it diverts a part of its refined glycerine supply to fuel its PG plant, the source said. The company will continually shift its glycerine and PG production rates depending on market prices, the source said.

“Once we get the PG plant up and running closer to capacity, we will limit refined glycerine sales,” the source said. “But there will be sales.”

The plant is now fully staffed with 60 employees and should be operational within the next two months, the source added.

Prices for US refined vegetable glycerine were assessed at 26-32 cents/lb ($573-705/tonne, €407-501/tonne), and tallow glycerine at 29-34 cents/lb on 20 January, according to according to global chemical market intelligence service ICIS pricing.

Crude glycerine prices crept up by 1 cent/lb,  to 5-6 cents/lb, as production rates sank in the biodiesel sector, the main source for the chemical.

($1 = €0.71)

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