US Q3 glycerine contracts assessed at a sharp increase following major Q2 supply chain disruptions

HOUSTON (ICIS)–US Q3 glycerine contracts were assessed at a sharp increase from Q2 following major supply chain disruptions during the quarter.

Q2 spot prices surged, tracking a sharp increase in demand for hand sanitizers alongside major disruptions to the supply chain amid the onset of the coronavirus pandemic.

Traditional manufacturers and non-traditional players like distillers emerged amid the onset of the pandemic to boost hand sanitizer production to mitigate the spread of the virus.

However, the pandemic caused major supply chain disruptions globally – particularly in southeast Asia, the major regional supplier of US imports.

Approximately 30% of domestic vegetable glycerine consumed in the US is imported, and many large multinationals have significant volumes of their supply chains tied to foreign production.

Supply insecurity led to a notable increase in demand for domestic soy- and tallow-based material among manufacturers that traditionally have non-GMO formulations for and prefer non-GMO labelling on their products.

Domestic production from large, fully-integrated biodiesel producers as well as vegetable- and tallow-based oleochemical producers has largely remained in tact during the pandemic.

This combination of factors prompted increased demand for domestically-produced vegetable- and tallow-based glycerine and putting upward pressure on the wider market, underpinning the Q3 negotiations.

US Q3 refined vegetable glycerine contracts were assessed higher at 47-62 cents/lb FOB (free on board) Midwest.

The quote for refined vegetable-based glycerine includes prices for GMO and non-GMO product. Prices for GMO product were typically toward the bottom-end of the range, while prices for non-GMO product were typically in a range from the low 50s to the top-end of the range.

Refined tallow glycerine contracts were assessed higher at 45-60 cents/lb FOB Midwest.

Pharmaceutical-grade glycerine contracts were assessed higher at 77-92 cents/lb FOB Midwest.

Q3 contract settlements were largely heard within the posted ranges, although some settlements were also heard above and below ICIS’ assessments.

Glycerine is mainly used in personal and oral care products such as skincare creams, toothpastes and mouthwashes, as well as food products either as glycerine directly or one of its derivatives such as glycerol mono-stearate.

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