Buyers predict modest growth
By Staff -- Purchasing, 3/11/1999
PRICES: Slight upward pressureGlycerine prices show signs of upward pressure after some price slippage during the first half of 1998. Market analysts attribute lower import levels and improved demand as reasons for modest, but steady, increases in glycerine prices through the end of this year.
In second-quarter '98, glycerine contracts averaged 48.7¢/lb, according to data from Purchasing's monthly survey of chemical buyers. Contract prices have remained stable at that level since the end of last year, while spot tags have decreased from their first-quarter '98 average of 53¢/lb to their current level of 49.4¢/lb.
Buyers expect glycerine contracts to hold within a cent of their current level of about 49¢/lb until the end of the second quarter. At that time, upward pressure from lower supplies will begin to push contracts up to about 50¢/lb, where they will remain through first-quarter 2000.
Spot tags have seen more substantial decreases in the past year. In first-quarter '98, glycerine spot tags averaged 53¢/lb. Prices then fell to 51¢/lb in the second quarter and continued to slide. By the fourth quarter of '98, spot tags averaged just slightly less than 491/2¢/lb.
Buyers predict that spot market prices will rebound to 51¢/lb on average for the first quarter of this year, then increase to 53¢/lb in the second quarter. By the beginning of the third quarter, spot tags will increase to 54¢/lb where they will remain for the rest of 1999, according to Purchasing's monthly survey. An increase of another 1¢/lb is expected for first-quarter 2000.
SUPPLY: Ample
Most glycerine production in the U.S. is derived as a by-product of oleochemical production, including the manufacture of soaps, fatty acids, and fatty alcohols. Actual production depends on the demand for oleochemicals as well as the capacity to refine the crude glycerine. For every 10 lb of primary product manufactured, about 1 lb of glycerine may be produced.
In other supply news, Archer Daniels Midland Company had planned to build a 50 million lb/yr glycerine plant at Cedar Rapids, Iowa, based on a proprietary fermentation process, but the project has been put on hold indefinitely because of market conditions.
Witco is bringing on a new still at Mapleton, Ill., to upgrade crude glycerine into refined material. The unit complements an earlier expansion at Mapleton in distillation capacity for high-quality fatty acids.
DEMAND: Flat
Analysts forecast modest growth for the glycerine market this year. Most believe demand will grow 3%-4% for 1999.
In the long term, producers expect glycerine to grow steadily at about 3% for the next several years, barring any unforeseen supply outages.
Growth in the food and beverage segment of the market will be coupled with modest growth in drugs and personal-care products. In food and beverage markets, much of demand growth depends on the continued development of new applications.
Glycerine competes on a cost basis with sorbitol, propylene glycol, and pentaerythritol in a number of markets. Availability of natural glycerine is tied to demand for primary products such as soaps, fatty acids, and detergent alcohols.
MARKETS: Varied
Glycerine is used in a wide range of markets, most of which are mature. The largest application for glycerine is in the pharmaceutical and personal-care segments, including toothpaste. Food processing is the next largest market.
Two growing market segments for glycerine include skin-care products, driven by suntan and beauty lotions. In the food industry, increased use of glycerol esters reflects a continuing trend of reduced fat in foods, especially in baked goods. Ready-to-eat foods have also shown strong demand for glycerine as a preservative.
End uses for glycerine in tobacco/triacetin are declining. Other end uses for glycerine include urethanes, cosmetics, alkyd resins, cellophane, and explosives.
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