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Gauging What’s Going on in the Global Glycerin Market

June, 2022

By: Petrina Ng, Senior Category Account Executive

The world is more globally connected than ever, and that applies to the world of glycerin, as well. It seems that even the flap of a butterfly’s wings halfway across the world could affect the harvest and crop yields and the availability of glycerin in another region.

Prices of both crude and refined glycerin globally continue to trade above their historic 10-year price average. Multiple factors have driven this dynamic:

• Elevated feedstock costs — Soy, lauric and tallow prices remain high, for numerous reasons affecting supply. Conflict in Eastern Europe has led to disruptions in sunflower and rapeseed oil production, along with poor weather conditions in Latin America impacting soy and export challenges for palm oil from Indonesia.

• Uncertain biodiesel production — The North American biodiesel market has been running strong on the back of sufficient soybean oil supply and healthy margins. That said, lower mandates, high feedstock costs and limited fertilizer supply may impact biodiesel production in Europe and Latin America. The general outlook is still dampened by growth in renewable diesel, that does not generate glycerin as a coproduct, contrarily to biodiesel.

• Logistics challenges — Deep-sea freight and logistics remain challenging, resulting in inconsistent flow of glycerin globally. The North American trucking and rail network continues to operate with more demand than available supply disrupting glycerin flow between shore tanks and customer sites.

Let’s consider key regional markets, individually:

• North America — The spot market appears to have been stable, supported by strong domestic biodiesel production and sustained demand. However, domestic logistics remain constrained, with limited availability of trucks and railcars. America’s Renewable Fuel Standard (RFS) and the current U.S. administration’s goal of net zero carbon emissions continue to encourage growth in renewable diesel production and capacity, keeping the future of North American first-generation biodiesel still hanging in the balance. Imports were up for three consecutive months from February to April, but deep-sea logistics continue to be unreliable and expensive.

• Latin America — Biodiesel production has been lower due to reduced biodiesel blend rate mandates, with Brazil at 10% and Argentina at 5%. Soybean oil production could be limited further due to dry weather conditions and a lack of fertilizers from Russia and China, which could potentially reduce soybean yield.

• Asia — Covid-19 has deeply impacted the region, with China’s Covid-zero policy resulting in regional lockdowns and curtailed production activities and, therefore, a corresponding drop in glycerin demand. Demand appears to be slowly picking back up, with evidence of recent upward pricing pressure in the region.

• Europe — European spot pricing appears to be the highest globally, driven by supply chain disruptions resulting from the conflict in Eastern Europe. Biodiesel production in Europe is expected to be limited due to rising fertilizer costs and a lack of non-GMO rapeseed oil feedstock.

Butterflies will continue to flap their wings, and the markets will do what the markets will do. However, since the 1800s, P&G Chemicals has been producing high-quality refined glycerin in our state-of-the-art facilities, backed by a dedicated regulatory and quality team. We will leverage our strong logistics network to protect supply for our valued long-term customers and remain your reliable supplier of high-quality glycerin.