FocusAsia glycerine prices poised to rise on tight supply in Q1

29 January 2010 06:48  [Source: ICIS news]

By Serena Seng

SINGAPORE (ICIS news)--Glycerine prices in Asia are poised to rise in the first quarter of 2010 on tight supply due to a fall in biodiesel production in the region, market sources said on Friday.  

Glycerine is a by-product of biodiesel production.

Spot prices of refined glycerine had risen $20-50/tonne (€14-36/tonne) from $470-530/tonne FOB (free on board) southeast (SE) Asia in January 2009 to $520-550/tonne on 20 January 2010 according to global chemical market intelligence service ICIS pricing. 

Glycerine is used in the antifreeze, gunpowder, cigarette, pharmaceutical and personal care industries. It is also used to make epichlorohydrin.

Traditionally, biodiesel production is weak in the first quarter of the year because of reduced demand from Europe - a key importer.

Biodiesel’s high cold filter plugging point (cfpp) makes it unsuitable for cold weather and Asian plants usually increase their output after March for the summer when biodiesel demand peaks.

Glycerine supplies from fatty acids production at oleochemicals plants were also said to be tight amid higher demand from downstream pharmaceutical and personal care markets, market participants said.

Biodiesel production had also dropped because of the total halt in exports to the US since the beginning of 2010 due to the expiration of the US biodiesel blending credits, market sources said.

Until the US congress decided on renewing blending credits, the trade window to the US would remain firmly shut and Asian producers would have to wait for the Europe markets to pick up to increase production, market sources added.

High feedstock costs could be another reason for the reduction in glycerine output, traders said.

Palm oil-based biodiesel prices had risen $210-350/tonne from $500-650/tonne FOB SE Asia in January 2009 to $850-860/tonne on 21 January 2010 according to ICIS pricing.

Prices were likely to remain at the $800s/tonnes level until after March, producers said. 

There are currently six active palm oil-based biodiesel plants including Wilmar, Musim Mas and Global Energy Resources in Indonesia and Vance, Mission and Carotech in Malaysia. None of these plants were currently producing at full capacity, sources close to the plants said.

Despite the weak outlook for 2010, a new entrant into the field Senari Biofuels expects to begin production at its 120,000 tonne/year plant in Malaysia from March. This could make glycerine exports from Malaysia more competitively priced, traders said. 

($1 = €0.72)

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By: Serena Seng

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