The glycerine market in the United States is seeing finely balanced supply-demand movement as the next half year ramps up.
Market players are trying to measure the shortage of glycerine supply in next few months in the face of a delicate supply-demand balance.
With most of American glycerine producers sold out and fix their sales contracts for the third quarter, there is a deep concern that any interruption of supply would drive up prices in the months to come.
“There was a Midwest producer who had a plant issue in the first quarter, and that caused some of their buyers to frantically try to source material and was one of the reason the market tightened up so quickly in Q1,” a supplier said.
As opposed to the pressed supply in the country, international spot markets tend to show signs of easing supply situation.
The southeast Asian countries are seeing a continuous rise in glycerine supply. Moreover, biodiesel producers are ratcheting up production as demand for biodiesel goes high due to a diminishing price gap between palm oil and gasoline.
In Europe, an oversupply of oil will be probably improved in the last quarter of this year, while upstream biodiesel imports to the European Union may become less due to unsettled trade disputes over tariffs.
Concerning South America, many market participants will keep close watch on the result of the biodiesel trade conflict between Argentina and Europe.
It is widely expected by glycerine refiners and biodiesel producers in Argentina that the EU will stop introducing biodiesel in the second half of the year by enforcing new tariffs in September or October.
The European Commission (EC) released an announcement earlier in May that any of Argentine biodiesel exports to EU will be registered from 24 May for the next nine months. This aims to impose tariffs on the exports in a traceable manner if the anti-subsidy case underway finds biodiesel from Argentina is being subsidized.
Argentina’s production of biodiesel and crude glycerine has been significantly impacted since the US started imposing tariffs on biodiesel imports from the country in November 2017.
The US Department of Commerce set duties on Argentine biodiesel exports at a considerably high rate of 72% in November 2017.
After the United States kept Argentina away from its biodiesel market, Argentine biodiesel production experienced a sharp decline of 20.5 percent in the third quarter of 2017, according to INDEC, the country’s statistics agency.
The Argentine biodiesel sector is projected to achieve about 700,000 tonnes of biodiesel exports to Europe in 2018, but the decision by EC could impede the South American biodiesel giant in reaching its targeted export volume.
This would have an adverse effect on global glycerine supply and could again result in tighter supply in the glycerine markets that are already finely balanced.