OUTLOOK ’12: New uses make refined glycerine oleochem leader

04 January 2012 20:42  [Source: ICIS news]

HOUSTON (ICIS)--Emerging new uses for refined glycerine will put the oleochemcial co-product at the forefront of the sector.   

Refined glycerine is a co-product in the manufacture of oleochemicals such as fatty acids and fatty alcohols, as well as from the transesterification process of making biodiesel - a methyl ester.

The exit of Archer Daniels Midland (ADM) from the US Pharmacoepia (USP) glycerine market in January 2012 will take pounds out of the refined glycerine market to be used in the production of monopropylene glycol (MPG).

ADM has a 100,000 tonne/year capacity plant at Decatur, Illinois, for the production of MPG. The plant began operations during the second quarter of 2011, and is  positioned to move towards full production use.

ADM’s biodiesel production will continue at two plants, but the crude glycerine output from these plants will be dedicated to refining in order to meet the feedstock needs of its MPG production.

ADM will then be considered a net-buyer of crude and refined glycerine, rather than a producer. 

Adding to the potential effects of ADM’s exit is the advent of ASTM (American Society for Testing and Materials) certified refined glycerine to be used in ethylene glycol (EG) blending.

Stringent specifications and monitoring have commanded the entry of refined glycerine into the glycol sector, with ASTM committees and glycerine refiners placing checkpoints along the process for over a year before sanctioning the certification.

At present, ASTM is working with various groups to conduct testing toward process and performance criteria to ensure confidence in the glycerine blends. 

Market participants expected about 5m lb (2,268 tonnes) of refined glycerine to be utilised in the glycol market in 2012, and expected this number to increase by the end of the year. 

Another watch point is the expected January start-up of Solvay’s Thailand epichlorohydrin (ECH)-from-glycerine plant.

Refined glycerine needed for the plant's feedstock  was estimated to be in the thousands of pounds, with geographical sourcing expected to come from Argentina, Europe and Asia. China's role  in the sourcing remains unclear.

If Solvay moves to source refined glycerine for the Thailand plant from China, then glycerine supply in the other regions, especially Argentina, may lengthen.

“We may see a messy first quarter, but glycerine will strengthen in 2012,” one US supplier said.

Even with a potentially ‘messy’ first quarter, refined glycerine contract prices are pressured up because of the ADM exit and demand from many of refined glycerine’s over 1,500 end-uses.

December vegetable-based refined glycerine contracts were assessed at 38–46 cents/lb ($838/tonne–1,014/tonne, €645–781/tonne)  FOB (free on board) midwest, with tallow-based material at 36-44 cents/lb, same basis.

Both spreads were considered to be pressured up by 2–4 cents/lb in first-quarter contract negotiations.

The December price range is essentially the quarterly spread as most, but not all, refined glycerine contracts are quarterly.

The ‘messy first quarter’ could come at the hands of the biodiesel market – not a new pang for glycerine – as the fate of the federal tax credit on biofuel hangs in the balance of political winds.

Without a smoothly operating biodiesel market that can assist in supplying crude glycerine of sufficient purity for use in domestic refining, US oleochemical refiners and refined glycerine producers must continue to import.

The US remains a net importer of refined glycerine, estimated at about 45% of total domestic demand.

In pricing, biodiesel derived crude glycerine ranged 7–10 cents/lb FOB (free on board) midwest in December.  

The crude glycerine moving at the 10 cents/lb level was at a minimum 85% glycerol, with low salts and MONG (many organics not glycerine).

Crude glycerine from biodiesel remains a muddled segment, partly because of the unpredictable fate of the federal tax credit upholding the US biodiesel fuel side, and partly because of the lack of regulation over the wide spectrum of crude glycerine qualities produced.

Glycerine is always partnered into the oleochemical industry, but in 2012 it will be leading the industry into what could well be a new era.

By: Judith Taylor
+1 713 525 2653

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