Europe glycerine supply to remain tight until year-end despite easing feedstock pressures

Samantha Wright

06-Dec-2021

LONDON (ICIS)–European glycerine availability is expected to remain very short for the rest of the year, despite improvements in upstream biodiesel production.

Both refined and crude glycerine has been very tight for several months amid low biodiesel production.

There were several factors contributing to the low biodiesel production, including force majeures in both upstream methanol and at two catalyst units in Europe.

There have also been very high vegetable oil prices for most of 2021 amid low harvests and a lack of workers due to the coronavirus pandemic, coupled with high freight costs. This significantly reduced biodiesel margins for most of the year.

Biodiesel production has improved in recent weeks though with margins improving again.

However this has not led to any improvement in glycerine availability.

There was a large back log of previous orders which needed to be filled so any additional glycerine produced in the past few weeks has been going to these orders instead.

As a result, though biodiesel production is likely to remain healthy for the rest of December, it is not anticipated that there will be any increase in glycerine spot supply until the end of 2021.

Contract offtake will continue to be healthy for the rest of the year, with no delay to deliveries. It is mainly the spot market that has been hit by the lack of additional availability.

Demand is expected to be fairly weak in December, as most players are finishing up their annual contracts before the new 2022 contracts begin in January.

There could be a slight uptick in buying interest during the final weeks of the year as some players run out of contracted volumes and turn to the spot market.

However this is likely to be only a small portion of players, with most covered until January.

One source said: It’s so quiet this week, my inbox is 20% of what my normal workload is. People have now covered spot and there isn’t much happening.”

Players continue to focus on expectations for next year, with most annual contracts now concluded.

First quarter contract discussions are now the key focus for most market participants, with negotiations underway.

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.

Focus article by Samantha Wright

Thumbnail photo:  rapeseed (Brassica napus) used to produce vegetable oil in a field near Bacsbokod, Hungary
Image credit: BALAZS MOHAI/EPA-EFE/Shutterstock

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