FocusChina crude glycerine prices fall amid continuous weak demand

08 April 2011 05:17  [Source: ICIS news]

By Serena Seng

SINGAPORE (ICIS)--Crude glycerine prices in China are falling because of a prolonged weak demand as buyers still have sufficient inventories procured before the Lunar New Year in February, industry sources said on Friday.

Crude glycerine prices fell by $30/tonne (€21/tonne) to $400-450/tonne CIF (cost, insurance & freight) CMP (China Main Port) on 6 April, down $10-25/tonne from $410-475/tonne CIF CMP on 9 March.

The sources said the demand will continue to remain weak this month and possibly through May because of the seasonal lull for crude glycerine, which goes into the making of refined glycerine.

The April-May period is traditionally a low-demand season for crude glycerine as most buyers cover their requirements ahead of the Lunar New Year festivities.

“Demand is bad. Everyone has high inventories so there is no need for any immediate replenishment of cargos,” a local buyer in China said.

Most market players think sellers are dropping offers in a bid to move some cargoes.

These market players expect demand to remain weak throughout April as buyers have no requirements for the material.

Demand started to weaken after the Lunar New Year holidays in early February as Chinese buyers had bought enough cargoes to last until the end of April/May.

“Most buyers are covered until the end of April or maybe even early May,” a Chinese crude glycerine trader said.

“We expect this weak demand. Buyers would disappear and reappear at the end of April/early May to replenish cargoes for June and beyond,” a key crude glycerine trader said.

Most market players are confident that market activity will pick up in May, with slight rebounds in prices.

However, despite the languid demand in the Chinese market, good quality crude glycerine from South America, especially Argentina, is being offered at high levels.

According to a key seller of South American crude glycerine, offers were heard at $395-400/tonne FOB (free on board) Argentina for bulk material or $510-515/tonne FOB Argentina in flexibags. This was an increase of $195-200/tonne from $300/tonne FOB Argentina on 5 January.

This is mainly due to the increased demand from the US and Europe, which is contributing to tight supply and in turn, higher prices.

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.

“If any Chinese buyer wanted cargoes now, especially for good quality Argentina material, I will have to offer at $500/tonne and above. I can’t offer lower as other markets are fetching better margins and it makes no sense for me to sell at a lower price in China,” the key crude glycerine trader said.

($1 = €0.70)

For more on crude glycerine, visit ICIS chemical intelligence
Please visit the complete ICIS plants and projects database
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Serena Seng

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