Europe Q4 glycerine prices settle higher on lack of supply

06 October 2010 14:01  [Source: ICIS news]

LONDON (ICIS)--European fourth-quarter contract settlements for refined and crude glycerine were agreed up compared with third-quarter prices as the market suffered from shortages in supply and uncertainty on how to counter the lack of raw materials, market sources said on Wednesday.

Fourth-quarter contract prices for tallow material were assessed by ICIS at €460-480/tonne ($639-667/tonne) FD (free delivered) NWE (northwest Europe) compared with third-quarter prices of €400-440/tonne. Vegetable-grade material was assessed at €490-520/tonne FD NWE, compared with third-quarter prices of €400-460/tonne.

In the UK, fourth-quarter contract prices moved up in line with northwest European contract levels, with tallow grade assessed at £400-420/tonne (€460-483/tonne, $639-671/tonne) FD (free delivered) UK and vegetable grade at £430-455/tonne FD UK, compared with third-quarter prices of £310-380/tonne and £345-420/tonne respectively.

Demand was reported to be higher than it was a year ago but meeting volume availability was becoming difficult.

These higher prices were in contrast with the third quarter, when contracts were agreed down. At that time, the market had become longer and material was readily available.

Industry sources said that a reduction in biodiesel production in Europe, particularly in Germany, which is one of the largest biodiesel refiners, was one of the main reasons for the shortage of supply and the price hikes across all products.

Market participants said this had been caused by renewable energy directives (RED) for 2011. It is understood that within the new framework, producers will need to meet a set ­percentage of greenhouse emissions savings for the raw materials used to produce biodiesel. This will have an impact on crude glycerine as it is a by-product of biodiesel.

Some sources said they were settling on a monthly basis until the end of the year, simply because prices were too unstable and they were unwilling to take the risk that product does not meet guidelines for 2011.

Looking ahead, sources could not give any firm indications on first-quarter 2011 prices because of the new RED, but most agreed that they were likely to increase.

($1 = €0.72, €1 = £0.87)

For more on glycerine visit ICIS chemical intelligence
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By: Ila Halai
+44 20 8652 3214

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