FocusAsia refined glycerine at two-month high; may extend gains

19 September 2011 07:53  [Source: ICIS news]

Among the main end-users of glycerine in China are the paint and construction industries, which have shrunk considerably following government-imposed restrictions on the property sector.By Lei Lei Wong

SINGAPORE (ICIS)--Refined glycerine prices in Asia look set to continue rising in the coming weeks after hitting a two-month high of $760-790/tonne (€555-577/tonne) on tight supply, with most producers in southeast Asia claiming to have sold out October cargoes, industry sources said on Monday.

Spot prices on a free on board (FOB) southeast (SE) Asia basis, jumped by $40-50/tonne over the past two weeks, according to ICIS.

Most producers are bullish and have firm offers at above $800/tonne FOB SE Asia.

“I foresee prices to remain [at] above $800/tonne FOB SE Asia or even $900/tonne FOB SE Asia in the next few months,” a producer said.

Another producer sold a cargo for end-November shipment at $910-920/tonne FOB SE Asia, with some others heard concluding December cargoes.

“The reason for the tight supply in southeast Asia is mainly due to the reduced output from the fatty acid and alcohol plants as most of the plants are not running at full capacity now,” a trader said.

Refined glycerine is a by-product in the manufacture of fatty acids and alcohols, which currently suffer from weak demand.

A third producer, which is based in Malaysia, cited reduced output from biodiesel plants that may see refined glycerine prices breaking the $1,000/tonne FOB SE Asia mark in the next few months.

Asia’s exports of biodiesel to Europe usually slow during the winter months from November to February. Palm-based biodiesel freezes at low temperature, making it unusable during winter.

“As winter approaches, most biodiesel plants in the region [Asia] are running fractionally, resulting in less crude (glycerine) generated, which will in turn affect the RG prices,” the Malaysian producer said.

Prices of crude glycerine coming from south America are also on the rise, tugging at refined glycerine prices.

China is a major importer of south American crude glycerine. Offers for Argentinean cargoes were above $370/tonne CIF (cost, insurance, freight) China Main Port (CMP) last week, a 35% increase from levels heard in July, according to ICIS data.

“Few end-users are willing to pay the current high prices, however they may no longer have a choice when they run out of inventory,” a trader said.

Other market players, however, said a continuous price spike for refined glycerine may not materialise in the near term, as downstream demand in the important Chinese market remains poor.

China has not been buying from us since July,” said a southeast Asia producer.

Some buyers in China are not in a hurry to procure more material since cargoes bought in the previous months are just arriving, market players said.

“The demand is not there, so the buyers are unwillingly to pay the premium prices quoted to them currently at almost $900/tonne CIF CMP,” a broker said.

Among the main end-users of glycerine in China are the paint and construction industries, which have shrunk considerably following government-imposed restrictions on the property sector.

($1 = €0.73)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Wong Lei Lei

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