Chinese glycerine trade low in uncertain market

13 October 2011 17:18  [Source: ICIS news]

HANGZHOU (ICIS)--Trading activities in the Chinese glycerine market remained thin this week, even with industry players’ return from holiday, with no clear direction for prices, market sources said on Thursday.

China, a major consumer of glycerine, reopened for trade this week after a week-long hiatus for its National Day between 1–7 October.

“Buyers are more cautious at the moment, as they are afraid of current high prices collapsing,” said a source from the shipping industry.

In the Chinese domestic market, major glycerine producer Wilmar raised its offers for 95% refined glycerine by almost 10% to yuan (CNY) 5,600/tonne ($880/tonne) from CNY5,100/tonne in the last week of September.

But actual deals remained at CNY4,600–4,800/tonne in east China and CNY5,200/tonne in the south of the country, market sources said.

“We are buying in smaller volumes these days,” one trader said.

A buyer said: “It’s a bit messy at the moment. We are still unsure of how the trend is going.”

Meanwhile, offers this week for Argentinian crude glycerine jumped up to $380–390/tonne – or €274–281/tonne – CIF (cost, insurance and freight) CMP (China Main Port) and Brazilian cargoes at $360–375/tonne CIF CMP.

But actual deals were priced lower, with realistic price ideas capped at $365/tonne CIF CMP, according to market sources. Crude glycerine was trading at $335–355/tonne CIF CMP just a month ago, according to ICIS data.

Price movements in the glycerine market tend to deviate from the trend seen for general commodities, as glycerine prices are more dependent on supply and demand fundamentals, market sources said.

But there are concerns that supply will eventually tighten, with Brazil likely to increase domestic consumption of its own glycerine, they said.

“Glycerine prices will continue to inch higher on [lower] exports volumes coming from Brazil and low oleochemical production in southeast Asia,” a second trader said.

($1 = CNY6.36, $1 = €0.72)

By: Wong Lei Lei

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