LONDON (ICIS)--European glycerine players are anticipating a possible hit to stocks of non-genetically modified (non-GMO) material in the summer months, with increased biodiesel imports expected.
Players are turning their attention to the possible upstream biodiesel imports from Argentina expected in the summer months. There are still mixed views on how much this will impact the European market.
After the EU settled on a pricing agreement with Argentinian producers — which saw producers agree to sell biodiesel into Europe at an agreed minimum price — players are expecting an influx of material from the country.
The main biodiesel produced in Argentina is soybean methyl ester (SME), which is a GMO product. This has led players to believe that if European biodiesel production is cut as a result of increased imports, non-GMO availability will be heavily impacted.
But other players have pointed out that an agreed cap of around 1.2m tonnes of Argentine biodiesel imports will mitigate any risk to European production.
One player suggested that if there is an impact to European production of rapeseed methyl ester (RME), demand for non-GMO material could still be filled by imports of palm-based material.
The source said: “I don't think production of glycerine out of soy will really affect non GMO, [I] think there is much more than enough non GMO material to cope with increase of imports from Argentina.”
There has been no impact as of yet, with the European glycerine market fairly calm in mid-March.
Minimal domestic demand has been noted heading towards the end of the first quarter.
Players are returning to the market following the Palm and Lauric Oils Conference in Malaysia last week.
Second-quarter contract discussions were a key part of meetings at the event, with most settlements expected by the first week of April.
Prices heard in discussions so far are pointing to values in line with current spot levels, at a decrease from first quarter levels.
European glycerine prices are stable this week amid limited market activity.
One player heard crude glycerine prices slightly lower than the current range, but the majority of players said that the range was representative of existing values.
There has been talk of upwards pressure on crude values in recent weeks, with one source noting rising prices this week.
This has been attributed to increasing demand from China as well as some possible plant maintenance and lower biodiesel production balancing out previously long supply.
Prices remain unchanged pending further feedback.
Refined vegetable glycerine prices are steady, with some upwards pressure being seen in the market.
One source said that the range should be narrowed, with prices at either end of the scale thought to be no longer achievable.
This has not been widely confirmed in the market so prices are unchanged pending further feedback.
Tallow/technical vegetable glycerine values remain unmoved awaiting further market feedback.
Crude glycerine availability is balanced-to-long dependant on the grade.
Non-GMO material is balanced, while GMO crude glycerine supply is long.
Non-GMO supply has particularly been impacted by strikes currently ongoing at several biodiesel plants in northwest Europe.
Refined vegetable glycerine stocks seem to be more balanced.
Pure rapeseed-based material is said to be slightly on the tight side.
This is not expected to improve, particularly in the coming months, with upstream RME typically used less in the summer.
Demand for refined vegetable glycerine is lukewarm in mid-March. Most players are covered for at least the first quarter, and in some cases the first half of the year.
There has been a slight pick-up in buying interest this week, with market participants thought to be assessing the waters for availability in the second quarter.
There has been a boost in demand from China for European crude glycerine in March following a prolonged absence from the market during Lunar New Year.
Buying interest from the feed market for crude glycerine remains healthy, while demand from refiners is said to be low.
Picture source: Charlie Neibergall/AP/REX/Shutterstock
Focus article by Samantha Wright