Update: Konsistensmidler

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Skrevet den 30.08.2018
Update: Konsistensmidler

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30. august 2018
Kilde: Procudan

Market development: Firming agents

Evaluation of glycerin market development and required actions.

After a long rise during the first half of 2017 and then a period of sideward movement, glycerin prices are now well below their 2017 peak - but still above what most consumer were used to in the past ten years.

Factors speaking for a falling market

  • Blending costs are still favorable. Demand for bio diesel is healthy. Alone in the period January – May 2018 output in Germany was 12% higher than in the same period 2017.
  • Many glycerin producers left a healthy share of their production capacity unsold in view of the disastrous events of 2017. The unexpectedly high offer of glycerin finds an easy home for refining.
  • Indonesia will broaden its B20 mandate (to increase production) to all diesel-driven energy sources (currently only certain road vehicles are included).

Factors speaking for a turnaround

  • From August on Argentine bio diesel will stop flowing into the EU (higher export tax; new ADD measures by the EU). This means around 15,000mt of glycerin per month will not be produced which currently find their way to China.  
  • The rapeseed harvest in Europe was extremely bad.
    Many bio diesel producers already now have trouble securing their feedstock. Market expectations are that the bad harvest will result in higher rapeseed oil prices. If rapeseed bio diesel prices do not move accordingly, producer’s margins will quickly be in the red again (as was the case during much of 2017). 
  • Many applications for glycerin (especially lubricants and defrosting, as well as feed applications) saw a high rate of substitution due to the high prices. This demand now returns.

There are factors speaking for prices falling further and factors speaking for the market having reached its bottom. Many participants in the market think the latter is the case for two reasons: the rally in Europe in 2017 driven by:

  1. high demand from China vs. low supply from Latin-American countries
  2. and negative margins for bio diesel producers in Europe

Advise

We currently see both of these factors appearing again. Customers are recommended to limit their risk exposure and cover their needs now!

 


11. juni 2018
Kilde: Procudan

Market development: Firming agents

Resent price update on glycerin.

The price of glycerine has been dropping slightly during the recent days due to unexpected healthy availability. 

Market

European bio diesel producers were heading for a difficult 2018 due to the lifting of the ADD against bio diesel from Argentina and Indonesia. Many major producers announced production cuts of 50% or even plant closures (two major bio diesel plants in Germany are currently offline). Please see below graphical illustration of bio diesel price spread.

Price and demand for bio diesel being directly linked to price and availability for glycerin.

1.5 million mt of bio diesel have already been registered as imports from Argentina. In a market of ~10 million mt around 15% of the market. This surplus of bio diesel is currently also affecting the glycerin industry as high availability push prices down momentarily.

(RME= rapeseed bio diesel; PME = palm bio diesel; SME = soy bean bio diesel)

What happens next?

Although bio diesel prices have recovered to the level of summer 2017, the wild card remains the oil price which moves according to the moods of “the Donald”. As long as oil prices stay strong (a notion welcome by all oil producing countries) the spread will likely remain at the level we currently see and production of biodiesel will continue at current levels.

However, we must also take into account that bio diesel production is healthy considering the circumstances of the high level of imported bio diesel, which is stored in the ARA region and currently consumed. It is still below the levels we saw in 2017.

Why is this important?

Glycerin stocks are currently high and prices under pressure. But the falling prices have attracted buying interest from overseas where much of these stocks are currently sold to. The maintenance period, which is due shortly, will further drain stocks. Since glycerin stocks are not reported, it is very difficult to say whether exports and maintenance will balance the market.

 


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