Price and market trends: China glycerine prices flat-to-up

26 April 2013 10:09  [Source: ICB]

China's spot crude glycerine prices are likely to remain stable-to-firm in April and May as a result of limited global supply even though derivatives demand is low, market sources said.

Brazilian sellers are offering crude glycerine derived from a mixture of tallow and vegetable oil feedstock for May loading at $410-415/tonne (€312-315/tonne) CIF (cost, insurance & freight) China, $10-15/tonne higher than the average April loading offers.

"The supply situation to [the] export market is still short, and the reason for lower availability to China is because Brazil and Europe markets are very strong," said a Brazilian seller.

BRAZIL BIODIESEL AUCTION

Supplies of crude glycerine, a by-product of biodiesel production, from Brazil are likely to be reduced further based on the outcome of the country's latest biodiesel auction.

CHina glycerineAround 488m litres of biodiesel were heard sold for May and June delivery, down by about 5.6% from the previous auction for March-April supplies, which in turn would mean less crude glycerine will be produced.

Biodiesel production, based on the volumes committed by buyers, will generate around 48,000 tonnes of by-product crude glycerine in the next two months, Brazilian sources said.

Argentina, another major supplier of crude glycerine into China, has only been offering sporadic volume since Europe started anti-dumping investigation on the country's biodiesel export in the first half of 2012.

The result of the anti-dumping investigation is likely to be announced in May 2013, and since anti-dumping duties (ADD) can be applied three months retrospectively, European buyers are cautious about purchasing Argentinian biodiesel, sources said.

As a result, limited by-product crude glycerine could be offered to the Chinese market, which typically imports 30,000 tonnes of the material each month.

In the first quarter of 2013, Chinese spot buyers mainly secured crude glycerine from Brazil; in lesser quantities from southeast Asia and sporadic volumes from Spain, Portugal, Colombia and the US, sources said.

Crude glycerine prices have been rising since January on limited global supply. Prices rose from $365-380/tonne CIF CMP in early January to $395-410/tonne CIF CMP on 10 April, ICIS data shows.

"There is no chance of a price decrease. I guess the price will hold stable this week and next," a China-based end user said on 15 April.

A separate Chinese buyer said: "Crude glycerine prices wouldn't drop as sellers are not in a hurry to sell. It is a sellers' market now."

Trader sentiment was mixed, with some expecting crude glycerine prices to stabilise, while others anticipate a steady price uptrend.

"Prices are stable-to-firm - seems to increase $5/tonne every week. Some people will still buy so it is difficult [for] prices [to] drop. If downstream products go up, crude glycerine will also increase," said a China-based trader.

As of 10 April, locally produced refined glycerine of 95% purity on a bulk basis rose by CNY100/tonne ($16.10) at the high end of the range to CNY5,000-5,500/tonne EXW to reflect the rising crude glycerine import costs.

DRUMMED PRICES FLAT

However, prices on a drummed basis remain flat at CNY6,300-6,600/tonne EXW on the back of slow demand for refined glycerine, given the ongoing macroeconomic weakness.

Some producers of epicholohydrin (ECH) also purchase imported crude glycerine, refining it domestically, and using it as an alternative feedstock to propylene.

The ECH market in China's domestic market is oversupplied, sources said.

China domestic bulk ECH prices fell CNY100/tonne to CNY9,200-9,300/tonne DEL to east China for the week ended 9 April.


By: Christina Siantar
+65 6780 4327



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