European Q2 refined glycerine contract settles up €150/tonne

24 March 2010 23:59  [Source: ICIS news]

LONDON (ICIS news)--European second-quarter refined vegetable and tallow glycerine contract settlements were agreed up €150/tonne ($202/tonne) higher than first-quarter prices on the high side due to firming crude glycerine demand and tight availability, buyers and sellers said on Wednesday.

Prices were reported at €420-500/tonne FD (free delivered) NWE (northwest Europe) for vegetable-grade product, up €120/tonne on the low side and €150/tonne on the high side of the range.

Tallow material was settled at levels of €400-480/tonne FD NWE, sources said, compared to €270-320/tonne FD NWE in the first quarter.

In the UK, second-quarter contract prices were moved up in line with northwest European contract levels, with tallow grade at £360-430/tonne FD UK and vegetable grade between £375-450/tonne FD UK.

These levels compared to first-quarter settlements of £250-290/tonne FD UK and £270-320/tonne FD UK for tallow and vegetable grades respectively, according to global chemical market intelligence service ICIS pricing.

One major factor was the strength of crude glycerine demand in Europe. The profitability of the feedstock meant that refiners were choosing to produce more of it at the expense of refined product production.

While crude glycerine demand, which had picked up in the fourth quarter of 2009, remained strong as a result of sustained interest from agricultural feed producers, there were other supply-side factors also pushing prices up, sources said.

One key factor was the new Archers Daniels Midland propylene glycol plant in Illinois, US, which was pulling on South American product that would normally move to the European market.

Sources confirmed that demand for refined product had been firming throughout the first quarter, with most interest coming from the cosmetics industry.

Some buyers believed that the price recovery, dependent on the strength of crude glycerine demand, remained fragile, with many contracts already settled on a half-yearly basis.

Uses for glycerine include adhesives, paints and resins as well as toiletries, food emulsifiers and cosmetics.

($1 = €0.74/€1 = £0.90)

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By: Alex Davis
+44 20 8652 3214

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