NPRA '11: Higher demand meets supply hike in US glycerine market

27 March 2011 16:30  [Source: ICIS news]

Supply/demand dominates Q2 glycerine contractsHOUSTON (ICIS)--Growing demand and a possible influx of supply are dominating negotiations for second-quarter refined glycerine contracts ahead of the National Petrochemical and Refiners Association (NPRA) 2011 International Petrochemical Conference. 

Although no formal increase announcements were made, suppliers are seeking to raise prices on an account-by-account basis.

Some suppliers are aiming at 2-5 cents/lb ($44-110/tonne) and others are trying to achieve increments over the 5-cent/lb mark, with narrowly aligned supply-and-demand fundamentals providing support.

First-quarter vegetable-derived refined glycerine contracts were assessed at 36-44 cents/lb FOB (free on board) midwest, with tallow-based refined material at 34-43 cents/lb FOB midwest.

Buyers and sellers are watching supply/demand fundamentals firm on an edgy balance between strengthened demand fostered by increasing economic recovery and insistent supply uncertainties fostered by the wobbly US biodiesel industry and South American imports.

Glycerine buyers are cautious about the second-quarter contracts and accepting price increases in uncertain supply conditions that appear to point toward fuller inventories they perceive will come from biodiesel production during the second quarter. 

US glycerine sellers are cautious about second-quarter inventories, seeking to raise contract prices as refreshed demand from end-uses ranging from foods to cosmetics to pharmaceuticals is increasing, quickly absorbing ready supply.

The US biodiesel industry is trying to rise from the ashes of a production collapse in 2010 on the freshly reinstated federal tax credit.

A ten-to-one production ratio exists between biodiesel and glycerine, with the bio-crude glycerine sometimes an unwelcome co-product of the fuel-making process. Selling the material can be challenging because of the need for higher purity and strict specifications that command the US refined segment.

South American bio-crude (of 80% glycerol purity) and semi-refined glycerine (distilled crude to 89-92% purity) shuttles its way from Argentina, Colombia and sometimes Brazil up the Caribbean lanes to the US Gulf coast.

As a net-importer of glycerine, US suppliers may, or may not, welcome South American material, depending upon overall demand requirements. 

US refiners may, or may not, take the bio-crude glycerine from fuel producers, depending upon the quality and distillation purity.

“There are just a lot of unknowns,” one buyer said.

US glycerine refiners include Procter & Gamble, Emery Oleochemical, Vantage Oleochemical, and Archer Daniels Midland.

The 2011 NPRA, billed as the world’s largest meeting for petrochemical producers and buyers, runs Sunday through Tuesday.

By: Judith Taylor
+1 713 525 2653

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