Asia refined glycerine may weaken further on ample supply

Focus story by Alexis Gan

SINGAPORE (ICIS)–Asia’s refined glycerine prices are poised to weaken further owing to abundant supply of the material in the market, industry sources said on Friday.

On 1 October, spot prices for drummed cargoes of refined glycerine fell $10/tonne week on week to $610-670/tonne FOB (free on board) southeast (SE) Asia, according to ICIS data.

Prices have been falling since April this year, shedding nearly 30% over a six-month period to the current average of $635/tonne FOB SE Asia, the data showed.

The downtrend was attributed to a supply glut from rising biodiesel production this year, in line global government policies on increased usage of cleaner fuel, market players said.

Moreover, global capacity expansions of fatty acid and fatty alcohols from 2013-2016 are estimated to be more than 3m tonnes/year.

Glycerine is a by-product of oleochemical and more recently, biodiesel production.

Asia accounts for 80% of the global expansion of oleochemicals capacity, given proximity to raw material palm oil products, and driven by strong demand growth.

Raw material palm oil is abundant in Indonesia and Malaysia, which have the biggest palm plantations in the world.

High stocks of refined glycerine will continue to exert price pressures in the market in the coming weeks, according to traders and some end-users.

“Demand is growing steadily, but upstream expansion is simply way faster than consumption growth,” a southeast Asia producer said.

A slowing Chinese economy, the world’s second largest, has been affecting demand and overall market sentiment in the Asia Pacific region, market sources said.

Some industry players, however, are expecting in the fourth quarter a seasonal upswing in demand related to winter applications, such as moisturiser in the personal care segment; and industrial applications, related to antifreeze sector. These would help ease the ample supply situation in the region, they said.

Refined glycerine has a wide range of applications. Pharmaceuticals, toothpaste, and cosmetics account for around 28% of total demand for the chemical; tobacco, 15%; foods, 13 %; and polyether polyols for urethanes, 11%. Other applications are in alkyd resins, cellophanes and explosives.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections