Market outlook: Glycerine demand looking up amid increased consumption, new end uses

10 May 2013 09:45  [Source: ICB]

Prospects are looking up for US refined glycerine markets as consumption in North and South America rises and potential new end-uses develop in 2013.

Refined glycerine consumption in the US was about 500m lb/year (227,000 tonnes/year) in the US for quite some time, but many in the market see that number rising between 2012 and 2013.

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The personal care products sector is the largest application for refined glycerine

Wider demand for refined glycerine is being driven by healthy buying in the personal care sector and new chemical routes to monopropylene glycol (MPG), where refined glycerine can be a feedstock, by increased use in the antifreeze markets and by new and evolving uses in heat transfer systems, sources have said.

The increase in demand is being discussed as about 50m-100m lb/year, although various players' estimates differ. The personal care products sector is the largest application for refined glycerine, growing at 3%/year alongside the appetite of "baby boomers" for skin-care creams as the generation nears retirement age.

Additionally, new end-use in engine coolants are gaining attention and offering demand growth estimated by industry participants to be as much as 10m lb of new consumption by the end of 2013.

A set of specification standards for a glycerine grade to be used in engine coolants has been ratified by the ASTM International (formerly known as the American Society for Testing and Materials), market sources confirmed in the third quarter of 2012.

The first specification for ASTM Engine Coolant Grade Glycerine (D7640) was approved and released for industry-wide publication in August, ASTM sources said.

Several ASTM engine coolant glycerine specification sets continue to be in various stages of development, with expectations that light and heavy-duty vehicle coolant systems using glycerine will enter commercialisation phases late 2012/early 2013.

99.5% PURITY NEEDED

Refined glycerine of 99.5% purity will be one of the blendstocks for several of the coolant systems, sources say.

US GylcerineOn the supply side, refined glycerine in the US has been described as balanced to snug in the second quarter.

Buyers in Mexico, Central America and South America were said to be searching for refined product of various grades and looking to US suppliers, where spot supply is already considered snug.

Recent developments in Argentina are likely one of the reasons that supply in Latin America is tight, according to a seller in the US.

The Argentine Secretary of Energy issued an announcement to refiners in April, including Yacimientos Petroliferos Fiscales (YPF), Shell, and Petrobras, setting an increase of the blend rate from the current 7% to 10% by June.

FIRE CUTS ARGENTINE SUPPLY

The decision to increase biodiesel blending rates comes after Argentina's YPF had to suspend operations in early April after a fire broke out at the La Plata refinery near Buenos Aires following heavy rains and an electrical outage.

YPF was nationalised in May 2012 in an effort to reinvigorate a domestic industry marred by a decade of production stagnation. The 188,000 bbl/day La Plata refinery accounts for 30% of Argentina's refining capacity, according to market participants.

A source familiar with the refinery's operations said production at the La Plata refinery will likely be 15-20% lower than in 2012, and that additional fuel would have to be imported this year to meet demand.

Meanwhile, sources in the region have said that decreased biodiesel production has lowered blend rates far below the previously mandated 7%.

The question remains if recent government-mandated blend rate hikes in Argentina will actually increase biodiesel production in the country, which will increase the crude glycerine supply and ultimately refined glycerine.


By: Leela Landress
+1 713 525 2653



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