OUTLOOK ’19: US glycerine markets mixed amid uncertainty

Leela Landress

07-Jan-2019

HOUSTON (ICIS)–The US glycerine markets are seeing uncertainty going into 2019 with global biodiesel production poised to increase and mixed price direction in the US domestic market.

Heading into 2019, most US glycerine market players will be closely watching the outcome of the Asia biodiesel ramp up and possible rising glycerine production as well as a snug US tallow refined glycerine market.

US tallow refined glycerine markets for the fourth quarter were mostly contracted, with minimal volume available for spot trades,  and are expected to see the same finely balanced market into 2019.

While the US domestic tallow supply/demand situation remains finely balanced, vegetable refined spot markets globally are starting to reflect the easing supply situation.

Glycerine supply continues to lengthen in southeast Asia with biodiesel producers expected to ramp up production due to higher biodiesel blending mandates from Indonesia and Malaysia.

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.

The US domestic vegetable refined glycerine market has seen some uncertain price direction in recent weeks as a fight for market share was heard to be brewing with lower pricing heard from southeast Asia imported product.

As imported spot volumes of vegetable refined glycerine are heard to be lower priced, the search for market share will likely see lower prices in the first quarter of 2019.

Looking to South America, many market players will be closely watching the outcome of the Argentine biodiesel trade dispute with Europe and a possible reopening of Argentine volume into the US market.

In December, the European Commission said it was planning to impose duties on Argentinian biodiesel following the anti-subsidy investigation.

Duties ranging from 25-33%, depending on the company, have been proposed, with a final decision expected at the end of 2018.

There has been discussion that the US Department of Commerce is looking into possibly changing its tariff decision regarding Argentine biodiesel imports.

There has been no formal announcement from the Commerce Department, but there has also been no denial, and the largest US biodiesel trade group is concerned and has requested a comprehensive review of the trade dispute.

“Argentina has made more than a dozen changes to its subsidies since January 2017,” said Kurt Kovarik, the National Biodiesel Board’s (NBB) Vice President of Federal Affairs. “In fact, throughout 2017 – even after Commerce completed its original investigation – Argentina continued to massively subsidise its biodiesel industry. Given this history, Commerce should understand that Argentina is very likely to provide new subsidies to its domestic biodiesel producers in the future. Any outcome from these new changed circumstances reviews should be based only on the record developed during the reviews.”

Argentine biodiesel and crude glycerine production was sharply affected when the US imposed tariffs on Argentine biodiesel in November 2017.

Tarriffs on Argentinean biodiesel were set at over 72% by the US Department of Commerce in November 2017.

Following the closure of the US biodiesel market to Argentine volumes, biodiesel production in Argentina declined by 21% in the third quarter of 2017, according to the nation’s statistics agency (INDEC).

Focus article by Leela Landress

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