Lower US Q4 refined glycerine contract levels emerging

Focus story by Leela Landress

MEDELLIN, Colombia (ICIS)–Fourth-quarter 2014 refined glycerine negotiations have largely concluded and price ranges have begun to develop, sources said on Wednesday.

Jostling for market share amid long supply globally and rising inventories in the US market has affected price negotiations for the quarter.

Price ranges have started to emerge for USP-certified vegetable refined glycerine and kosher-grade refined glycerine, which seem to be seeing some price erosion as large quantities of vegetable refined glycerine from southeast Asia and Argentina is being offered in the US.

USP-certified vegetable refined glycerine contract levels for the fourth quarter are heard around 41 cents/lb ($904/tonne) on the low end of the range and up to 50 cents/lb on the high end, depending on the end-use buyer and contract structure. Contract prices for Q3 were 46.5-52.0 cents/lb.

“The importers have brought too much in,” said a producer. “Tanks are filling up, and it isn’t clear where they are going to sell the product.”

On the tallow side, USP-certified tallow refined glycerine Q4 contract ranges emerging are heard around 40 cents/lb on the low end of the range and 49 cents/lb on the upper end. Contract prices for Q3 were 44.5-50.5 cents/lb.

“Tallow glycerine has softened some, but most of the price erosion was seen in the vegetable grades,” a seller said.

US refined glycerine imports have increased by 35% year-to-date (YTD) through July year on year, according to data by the US International Trade Commission (ITC).

Sharply higher imported tonnages stood out in the figures coming from Indonesia and Argentina.

Both countries have seen high biodiesel production rates this year.

Contracts are presently done on a quarterly basis, with a few shorter-term and longer-term contracts. Prices were assessed for the third quarter in July and will be assessed for fourth quarter in October.

High inventories going into the first quarter of 2015 could mean continued price softening for early 2015 as sellers work through full tanks, sources in the sector have said.

End-use segments in food and beverages, tobaccos, pet foods and industrial tiers are all said to be performing well and underpinning the snugness in the refined segment.

US refined glycerine suppliers include Procter & Gamble, Vantage Oleochemical, Emery Oleochemical, Twin Rivers Technology and Peter Cremer North America.

Major importers include Wilmar, Acme-Hardesty and several trading groups.