FocusHigh inventory weighs on Asia refined glycerine market

13 January 2012 03:10  [Source: ICIS news]

By Wong Lei Lei

SINGAPORE (ICIS)--Asia’s refined glycerine market may remain under pressure in the near-term as sellers unload current huge inventory of the product at lower prices, market sources said on Friday.

Spot values fell for the second consecutive week, with trades remaining thin as most buyers are waiting for prices to bottom out, they said.

Prices of drummed refined glycerine spot cargoes fell around 10% over two weeks to $700-780/tonne (€546-608/tonne) FOB (free on board) SE (southeast) Asia in the week ended 11 January 2012, according to ICIS data.

“I think some suppliers are under pressure to clear the inventory and thus the lower offers this week,” a trader said.

“Some suppliers may have held back on offering earlier on, anticipating further increase in prices,” said a buyer, adding that this likely contributed to the current oversupply situation.

A few major oleochemical producers from Malaysia has maintained their refined glycerine prices at above $800/tonne FOB SE Asia, saying they see no reason to decrease prices, as they are “comfortable” with their inventory levels.

Some players, however, are optimistic that prices would stabilise soon, to spur more buying activities in the spot refined glycerine market.

“I expect the prices to stabilize soon at $700s/tonne FOB SE Asia levels and buyers will soon start purchasing as most are still not well covered for this quarter,” said a major trader.

Many buyers have been buying spot cargoes on a hand-to-mouth basis in the last few months, when prices stayed above $800/tonne FOB SE Asia levels.

Producers were able to hold firm with their offers because of limited supply.

Availability of cargoes was scarce for the most part of the fourth quarter 2011, but the situation had reversed in late December.

“Glycerine supply has eased now that most oleochemical plants are back up after their annual turnaround in the last quarter, and there is also more supply from the biodiesel plants,” a producer said.

Glycerine is a by-product of oleochemical and biodiesel production. It has a wide variety of uses in the food industry and personal care industry - as a humectant and solvent – and in skincare products and toothpastes. Industrial usage for glycerine includes alkyd resins and cellophanes.

($1 = €0.78)

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

By: Wong Lei Lei

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