China crude glycerine at 22-month high on strong global demand

29 March 2011 07:55  [Source: ICIS news]

SINGAPORE (ICIS)--Chinese crude glycerine prices have hit a 22-month high on the back of a spike in global demand and the tight availability of South American material, ICIS data showed on Tuesday.

Crude glycerine prices were at $430-480/tonne (€305-341/tonne) CIF (cost, insurance & freight) China Main Port (CMP) this week, according to ICIS data.

Crude glycerine is traditionally used by Chinese refiners to produce refined glycerine. However, new applications such as the manufacture of epichlorohydrin (ECH) have increased Chinese consumption of the feedstock in recent years.

This has boosted demand and led to the persistent uptrend in prices, said market players.

Meanwhile, the pick-up in US and European demand for good-quality crude glycerine from South America is adding to the tight availability of the product, sellers said.

Many biodiesel plants in the US and Europe are running at reduced rates and that has led to a shortage of crude glycerine, which is a by-product of biodiesel production.

The shortage in South America has, in turn, fuelled the uptrend in the Chinese market, players said, adding that supply was particularly tight in Argentina and Brazil, which are key exporters to China.

As a result, Chinese traders were bullish about the outlook of crude glycerine prices and said that it would continue to rise next month.

“If Chinese buyers want good-quality product from Argentina, they will have to buy at the current market prices, which will be above $500/tonne CIF CMP in April,” said a trader in China.   

However, others told ICIS that they were not as optimistic, as Chinese demand had weakened in response to the higher import prices.

Furthermore, most buyers have already covered their requirements for March and April, they added.

“Demand is so weak now in the China market, I doubt there would be buyers, especially not downstream refiners,” said a China buyer.

As crude glycerine prices were already at a 22-month high, any further increases were unlikely to sit well with buyers, since demand in the Chinese market was tapering off, players said.    

“I don’t think prices would reach $500/tonne CIF CMP, as there is no underlying market support and I don’t think there is any buying interest at such high prices,” said a Chinese trader.

($1 = €0.71)

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By: Serena Seng

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