Corrected: US Q2 USP refined glycerine contracts settle 1, 2 cent/lb higher

12 April 2012 23:53  [Source: ICIS news]

Correction: In the ICIS news story headlined “US Q2 USP refined glycerine contracts settle 1, 2 cent/lb higher” dated 12 April 2012, please read in the 14th paragraph … Groups said to be bringing in the tech-grade material include Gavilon and Ocean Connect … instead of … Wilmar, Gavilon and Ocean Connect …. A corrected story follows.

HOUSTON (ICIS)--US USP refined glycerine second-quarter contracts settled higher this week, but clashing prices with South American imports are re-defining market tiers, buyers and sellers said on Thursday.

Vegetable-based refined glycerine second-quarter contracts were assessed at 41.50-49.00 cents/lb ($915-1,080/tonne, €695-821/tonne), while tallow-derived glycerine contracts were assessed at 39-48 cents/lb, both on a free on board (FOB) midwest basis.

Assessments represented an increase of about 1-cent/lb for vegetable material and 2 cents/lb for tallow from first-quarter levels. 

Price disparities are opening between these two traditional refined glycerine tiers, as South American refined glycerine from biodiesel production is making market share incursions in the US, domestic buyers and sellers said.

The price disparities happen at the low end of the tallow range, despite the vegetable basis of the South American material.

The reason for this is that glycerine made and refined from biodiesel production cannot be certified as US Pharmaceutical (USP), and most of the US vegetable- and tallow-based refined glycerine is USP certified.

As a result, a previously seldom used term called technical grade (tech-grade) glycerine, which refers to USP quality material that is not fully certified, is clashing with the traditional tiers, mostly affecting the low end of the tallow market.

“Prices are all over the place because of the tech-grade stuff,” one glycerine buyer said.

Tallow glycerine is oleochemically produced as a co-product of fatty acid production or by the saponification procedures in soap-making.

Prior to biodiesel production, the two-tiered glycerine market reigned.

But with long-term contracts taking place at prices well below USP certified contract prices, the tech-grade tier is here to stay.

Tech-grade glycerine contracts were largely discussed at 33-37 cents/lb, mostly on a FOB US Gulf basis, but no market range is yet established for this glycerine.

US refined glycerine producers of USP certified material include Procter & Gamble, Vantage Oleochemical, VVF, Twin Rivers Technology and Cargill.

Groups said to be bringing in the tech-grade material include Gavilon and Ocean Connect.

By: Judith Taylor
+1 713 525 2653

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