OUTLOOK ’18: US glycerine market faces uncertainties in new year

HOUSTON (ICIS)–The US glycerine markets are seeing uncertainty going into 2018 with global biodiesel an enigma, snug Asian oleochemical markets and mixed price direction in the US domestic market.

Heading into 2018, most glycerine market players will be closely watching the outcome of the Argentine biodiesel trade fights.

The US International Trade Commission (ITC) ratified the Department of Commerce’s decision to set tariffs of up to 72.28% to Argentinean biodiesel imports into the US market.

The US ITC decided that the US biodiesel industry “suffers significant damages by imports of biodiesel from Argentina and Indonesia”.

Most biodiesel plants produce crude glycerine at a 1:10 ratio, while additional costs will have to be incurred to process the product into refined glycerine for higher value application.

As a result, tariffs on Argentinean biodiesel were set from 71.45-72.28%, as required by the US Department of Commerce in November 2017.

Following the closure of the US biodiesel market to Argentine volumes, production in Argentina declined by 20.5% in the third quarter of 2017, according to the nation’s statistics agency (INDEC).

With the closure of the US market to Argentine biodiesel, the South American giant turned its focus to Europe and exported about 300,000 tonnes to Europe in the third quarter of 2017, but the exports could end in 2018.

A group representing European biodiesel producers filed a complaint about illegal state aid with the European Commission (EC) on 3 November.

It’s the latest development in a trade war between European biodiesel and its South American competitor.

In September, the EU removed tariff barriers on biofuel from Argentina. Now, the European biodiesel producers’ organisation has lodged a complaint about unfair subsidies with the EC.

The Argentine sector expects to export about 1m tonnes of biodiesel to Europe in 2018, but this recent lawsuit filed could derail those import plans for the South American biodiesel giant, which would affect global glycerine supply.

Looking to markets in Asia, market participants in southeast Asia have said they do not expect the short supply situation to ease with both biodiesel and oleochemical producers unlikely to increase plant utilisation in the near future.

Spot availability of oleochemicals is expected to remain limited and most suppliers have they said they are sold out until February 2018.

The US domestic market has seen some uncertain price direction in recent weeks as a fight for market share was heard to be brewing and some lower pricing heard.

US prices have risen by about $200-250/tonne FOB Midwest since the beginning of 2017 as US glycerine markets have been described as strong.

US refined glycerine suppliers include Procter & Gamble, Vantage Oleochemical, Emery Oleochemical, Twin Rivers Technology, Peter Cremer North America, ADM, Cargill, Owensboro Grain, Louis Dreyfus and Future Fuels among others.

Major importers include Wilmar, Acme-Hardesty and several trading groups.