Asia crude glycerine prices tumble on shrinking Chinese demand

SINGAPORE (ICIS)–China-bound crude glycerine prices nosedived this week amid weakening Chinese demand and buying sentiment may remain subdued going forward.

Prices of crude glycerine cargoes going to China Main Ports (CMP) could be further undermined, with trades involving south American and southeast Asian cargoes concluded at $210-220/tonne CIF (cost, insurance and freight) CMP.

Affected by the bearish sentiment, most Chinese buyers have been steadily lowering their buying indications as the week progressed, with some looking to secure cargoes at $200/tonne CIF CMP and below.

“A lot of refineries in northern Jiangsu and Shandong are forced to shut down,” a Chinese glycerine buyer said. “Basically, none wants to buy crude glycerine now.”

Last week, ICIS data put Asia’s crude glycerine price assessment at $230-245/tonne CIF CMP.

The recent explosion in Jiangsu region has caused a major disruption in production activities in the surrounding areas, where two major epichlorohydrin (ECH) producers and a number of glycerine refineries are located.

ECH can be produced using propylene or glycerine as a feedstock. ECH is one of the major downstream applications for glycerine.

Glycerine demand in China was already previously subdued on expectations of increased biodiesel production in Indonesia.

Indonesia is set to move from B20 (20% biodiesel blending ratio) to B25 or B30 this year, with many expecting the country to make an official announcement once a new government is formed after the country’s election in the second half of April.

However, some Indonesian biodiesel producers believe that the implementation of a higher biodiesel blending mandate may only happen towards the end of the year due to the preparations and logistics involved.

Brazil is also scheduled to move from B10 to B11. Originally, that was set to take place in the April biodiesel tender exercise, but it has since been pushed back.

Some market participants do not expect the move to B11 to happen until close to the last quarter of the year.

Focus article by Jackie Wong