FocusTight supply, seasonal demand support China glycerine prices

27 August 2012 06:35  [Source: ICIS news]

By Yeow Pei Lin

Glycerine, a by-product of oleochemicals and biodiesel production, has applications in personal care products like toothpaste.SINGAPORE (ICIS)--Spot prices of crude glycerine shipments to China are likely to be supported by tight supply and an expected seasonal improvement in Chinese demand during the fourth quarter, market players said on Monday.

Argentinian biodiesel producers are likely to have less by-product crude glycerine to export after the country’s government raised taxes on biodiesel exports to 32% from 20% earlier this month, traders in Asia said.

“Some biodiesel plants have stopped operations. More are likely to follow suit,” a trader said.

In addition to the export tax hike, the export-oriented biodiesel industry in Argentina is facing an uncertain future as the government of SpainArgentina’s largest biodiesel market – has announced in April a quota system to import only EU-produced biodiesel after Argentina seized control of Spanish-owned oil company YPF.

“Some Argentinian plants were already running at reduced rates because of the trade dispute. The export tax increase will make things even more difficult for the industry,” a trader said.

Argentina exported to China more than 70,000 tonnes of crude glycerine in 2011 and around 31,600 tonnes between January and June this year.

With the supply of Argentinian crude glycerine expected to fall, sellers in Brazil – a key exporter to China – are taking a wait-and-see stance, traders and brokers said.

“They have no inventory pressure and they are waiting for prices to go up further,” a broker said.

Spot prices of crude glycerine in flexi-bags have already risen by $12.50/tonne (€10/tonne) since mid-August to $325.50/tonne CIF (cost, insurance and freight) China Main Port, according to ICIS.

Sellers said the availability of crude glycerine from biodiesel facilities in Indonesia will likely tighten as the peak summer demand season in the key market of Europe has ended, an end-user said.

They are also hoping for an improvement in the performance of downstream applications, like anti-freeze, to improve in the fourth quarter when the weather turns cold.

Glycerine-based epichlorohydrin (ECH) start-ups in China will also drive demand, they said.

Some ECH producers import crude glycerine to refine into high-purity glycerine to be used as a feedstock.

Such end-users include Jiangsu Yangnong which is expected to start up its 30,000 tonne/year ECH plant at the end of the third quarter, although the project may face delays because of lacklustre performance in downstream epoxy resin sector, market players said.

($1 = €0.80)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
Request a free ICIS sample report for the latest prices and development in the Asian petrochemical markets

By: Yeow Pei Lin

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index

Related Articles