Editor Judith Taylor, judith.taylor@icis.com

   NOTE: For full details on the criteria ICIS pricing uses in making these price assessments visit www.icispricing.com and click on “methodology."

Early November market sentiment concerning the status of glycerine contract spreads was peppered with different perspectives during the week ended 7 November.

The vegetable contract range was considered representative for October/November business, according to most sources, but the tallow range collected widely mixed comments.

Several suppliers said the 47 cents/lb low end of the tallow spread had evaporated amid tight supply conditions and customers eager to ensure forward requirements were secure. At least one tallow supplier said it was not in the active market at this time, for spot or for new contract agreements, due to inventory concerns. However, the supplier said the majority of its current tallow glycerine contracts fell within the posted spread.

Other market players said the tallow range in November leaned toward a 53-60 cents/lb span, with contracts of 62 cents/lb and 65 cents/lb confirmed settled. It was as yet, however, unclear if the higher settlements were completed for Q4 business or if these pertained to Q1 contracts.

Some suppliers said both contract tiers were moving toward spot levels, while other suppliers said tallow contracts were not anticipated to move emphatically into the 60s cents/lb.

At least three market sources, including suppliers, were willing to admit uncertainties about price levels this week and attributed this to the swift pace at which the US refined glycerine segment was changing.

Changes in the refined glycerine market were founded in additional tiers of volatility due to up/down feedstock costs in both vegetable oils and bleachable fancy tallow (BFT). Vegetable oils, especially soybean oil and crude palm oil, were said to be more consistently tracking alongside crude petroleum oil prices and sources viewed this as a complication in the glycerine segment.

Other new wrinkles that invoked concerns were founded in the onset of the biofuels, where biodiesel production glutted crude glycerine for a while, but has now throttled back to the extent that the co-product is described in tight supply.

Possibly the broadest area of fresh complication has entered via the new applications that seek to utilise glycerine, with substantial demand growth said coming from  mono propylene glycol production from glycerol. The large new demand pockets were said taking up chunks of glycerine and sweeping the market horizon for more material, adding to shortened supply issues.

At least one US refined glycerine producer was said to have completed a maintenance turnaround in October, with some material sourced from other suppliers. Other suppliers have this week said that there was no additional inventory that could be used for assistance, should it be needed.

Another producer was thought to be having operational difficulties, but this was not confirmed.

Vegetable spot prices were adjusted up by 1 cent/lb on both sides of the spread this week. Deals at 68-69 cents/lb FOB East coast were said done several times and 80s cents/lb deals have been finished for drummed material. Importers said Q1 pricing on refined glycerine sourced FOB Malaysia was being quoted in the high 80s cents/lb this week.

There were no changes in the tallow spot range as two major tallow suppliers confirmed not participating in any spot business due to short supply.

Crude glycerine supply was also described as tight, although several crude glycerine buyers confirmed prices have not substantially moved up. Non-specified 60% crude glycerine remained priced in the 6-7 cents/lb area this week, while good quality hydrolyzer material at 80% quality was said available at the 6-7 cents/lb range and up to about 11-12 cents/lb in some situations.

A dramatic slow-down in US biodiesel production was said to be the underlying cause for short crude glycerine supplies.

($1 = 0.69)

This week on ICIS news ( www.icisnews.com):

06-Nov-07 09:21 Crude up $1/bbl ahead of expected US stock draw

05-Nov-07 21:57 Dow completes acquisition of Danish PU firm

05-Nov-07 18:42 Bayer acquires US polyurethane supplier

02-Nov-07 17:21 US chems welcome final high-risk substance list

02-Nov-07 11:48 Renewables to change chem industry