US glycerine Q2 contracts pressured up on supply/demand

16 March 2011 21:25  [Source: ICIS news]

HOUSTON (ICIS)--Second-quarter US refined glycerine contracts are being pressured up on supply/demand fundamentals, suppliers and buyers said on Wednesday.

Although there are no formal increase initiatives in the market, suppliers are seeking to raise prices on an account-by-account basis, with some aiming at 2-5 cents/lb ($44-110/tonne, €31-78/tonne) and others trying to achieve increments over the 5 cent/lb mark.

The lack of a leading price initiative, and subsequent following by other producers, is becoming more common in the glycerine market because contracts are shifting from long-term semi-annual and annual back to a quarterly timeframe, sources said.

Buyers have had long-term contracts at lower prices since about the fourth quarter of 2008 because refined glycerine inventories were ample and the US recession stymied demand.

US refined glycerine demand is stronger going into the second-quarter than it was in the first, suppliers and buyers said. Ranging from increased demand in food applications to higher demand in surfactants and cosmetics to more demand from the animal feed sector, buyers and sellers alike described demand exceeding ready supply.

Buyers and sellers said negotiations were underway, and several expected many contracts would settle during, or soon after, the upcoming National Petrochemical Refiners Association (NPRA) International Petrochemical Conference meeting in San Antonio, 26-29 March.

Refined glycerine contracts were last assessed at 36-44 cents/lb for vegetable-derived product and 34-43 cents/lb for tallow-based.

US glycerine producers and refiners include Procter & Gamble, Vantage Oleochemical, The Dial Corporation, Emery Oleochemical and Twin Rivers Technology. Biodiesel-based refiners include Archer Daniels Midland (ADM) and Cargill.

($1 = €0.71)

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By: Judith Taylor
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