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Glycerine Market Report


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December 2017 / N°119


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The Market Intelligence to Sharpen Your Performance

A quarterly publication of the Group since 1986 IIIIIIIIIIIIIIIIIIIIII


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Glycerine Market Report
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Background Note:

®
Oleoline is a registered trademark which belongs to HB International SAS (HBI). HBI is a brokerage
house specialized in oleochemicals with offices in Europe, China, India, Singapore, North America
and South America: www.hbint.com

HBI is an acknowledged specialist of the global glycerine market and has organized and chaired 4
Global Glycerine Conferences in the past. As brokers, HBI sold over 380,000 mt of glycerine
worldwide in 2016, including important volumes in both China and the USA. This wide operational
reach is unique in the glycerine market and provides a fundamental understanding of the mechanics
of this global commodity.

These credentials enable HBI and Oleoline to present a comprehensive, objective and knowledgeable
®
analysis of the global glycerine market. The "Oleoline Glycerine Market Report" has been published
since 1986. This Report is subscribed to and recognized as an industry reference by most of the
major market players in the glycerine market.

OLEOLINE Limited
Room 1906, 19/F, Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong

Violation of copyright is an offence. Any distribution, copying or other unauthorized use


®
of any notices:
Important part of the report without Oleoline 's express agreement is a copyright violation.
Infringers will be prosecuted.

The information contained in this report is a result of our knowledge of the market, as well as being
obtained from sources considered to be reliable. Every care has been taken to ensure its accuracy.

The quotations in this report are averages of price ranges pertaining to the market during the period reported.
They are based on bids, offers and trades heard in the market or handled by our sister company HBI during the
period concerned, and we believe them to be representative of market levels.

However, Oleoline® cannot accept responsibility for the information


contained in this report, nor for our prognoses and opinions.

You are welcome to give us your feedback: oleo@oleoline.com


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CONTENTS
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1/ Summary ....................................................................................................................................................................................... 2

2/ Glycerine Markets by Geography.......................................................................................................... 4


2.1 The US glycerine market ............................................................................................................................................................ 4
2.2 The European glycerine market ............................................................................................................................................. 13
2.3 The Chinese glycerine market ................................................................................................................................................ 21
2.4 The South-East Asian glycerine market ........................................................................................................................... 26
2.5 The South-American glycerine market .............................................................................................................................. 28

3/ Prognosis...................................................................................................................................................................................... 30

CONTENTS OF TABLES AND GRAPHS


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1/iiiiiiiiii
Summary
TABLE I Short term view of glycerine prices, September 2017 to mid-2018.................................................................. 2
GRAPH I USA & European spot prices for 99.7% kosher glycerine delivered customer in bulk, 1995-2017...... 3

2/ Glycerine Markets by Geography


GRAPH II Evolution of the US glycerine market, 1995-2017 ................................................................................ 4
TABLE II USA production of glycerine, 1995-2017 .............................................................................................. 6
TABLE III USA consumption of glycerine, 1995-2017 .......................................................................................... 8
TABLE IV USA imports of glycerine, 1995-2017 ................................................................................................... 9
GRAPH III Crude and refined glycerine stocks USA, 1995-2017 .......................................................................... 10
TABLE V USA spot price of kosher quality refined glycerine, 1995-2017 ........................................................... 11
GRAPH IV European production, imports, exports and consumption of glycerine, 1995-2017 ............................. 13
TABLE VI European production of glycerine, 1995-2017 ..................................................................................... 15
TABLE VII European consumption of domestically supplied glycerine, 1997-2017 .............................................. 17
GRAPH V European crude and refined glycerine producers’ stocks, 1995-2017 ................................................. 19
GRAPH VI European spot price of kosher and technical refined glycerine, 2001-2017 ........................................ 20
GRAPH VII Monthly volumes of crude glycerine imports into China, 2016-2017 .................................................... 21
GRAPH VIII Imports of refined and crude glycerine in China, 2008-2017................................................................ 22
TABLE VIII Estimated Chinese domestic production, imports and consumption of glycerine, 2006-2017 ............. 23
GRAPH IX Crude glycerine prices CIF China main ports, 2005-2017 ................................................................... 24
TABLE IX Refined glycerine spot prices in China, 2008-2017 .............................................................................. 25
TABLE X FOB Malaysian/Indonesian prices of kosher refined glycerine, 2008-2017 ......................................... 27
GRAPH X Crude glycerine prices in USD pmt FOB South America, 2014-2017 .................................................. 29

3/ Prognosis
TABLE XI Global biodiesel production, 2015-2017 ............................................................................................... 30
TABLE XII Short, medium and long-term forecasts for glycerine prices, 2017-2018 ............................................. 32
1/ SUMMARY

TABLE I

Short Term View of Glycerine Prices


December 2017 to mid-2018

USA Europe
Est. for USA Est. for Europe
PRODUCT December December
Mid-2018 Mid-2018
2017 2017

99.7% kosher quality


refined glycerine spot price
USD 48 c/lb. EUR 900 pmt USD 47 c/lb. EUR 700 pmt

99.5% technical quality


refined glycerine spot price USD 42 c/lb. EUR 800 pmt USD 40 c/lb. EUR 600 pmt

80% crude glycerine spot price


- for refining USD 18 c/lb. EUR 475 pmt USD 17 c/lb. EUR 350 pmt
- for disposal USD 5 c/lb. EUR 200 pmt USD 4 c/lb. EUR 175 pmt

NB: Spot prices are defined as an average level of sales made during the captioned month in bulk, delivered customer.
Estimates based on exchange rate: € 1 = $ 1.17

The evolution of the 2017 glycerine market has taken pundits aback, and only recently is a sufficiently clear
picture of what has happened beginning to emerge.

The remains of the heat from El Niño continued to sear the competitiveness of palm-based products and
diminish glycerine generation. Biodiesel production in Asia has been especially disappointing in 2017. By coincidence
the Chinese production of propylene-based epichlorohydrin (ECH) has been gradually shut down, simultaneously
pushing up prices of ECH and demand for glycerine in China because ECH is now produced predominantly via the
glycerien-to-ECH route. With little availability of glycerine out of Malaysia and Indonesia, Chinese importers have dried
up inventories in South America and in Europe, a phenomenon largely described in the previous edition of this
Quarterly market report.

The biodiesel anti-dumping drama injected a heavy dose of confusion in biodiesel markets and has left many
producers in Europe and Argentina assuming that they would have very little sales for the second half of the year, and
therefore poor generation of glycerine. Such duties should theoretically have no effect on the overall supply of
glycerine, since they merely displace generation from Europe to Argentina for instance. Unexpectedly, these duties
caused both South American and European sellers to temporarily withdraw from the glycerine market.

The third important aspect of 2017 has been the evolution of stocks, which directly influence prices. In normal
circumstances, underestimating sales of biodiesel would lead to a trend of lower glycerine prices as biodiesel
producers have limited storage capacities for glycerine. The opposite happened in 2017. The Argentine market has
prepared for a difficult year and has built up defensive stocks of glycerine. Strong demand from China, even at higher
prices than what the market had been able to absorb in similar conditions in previous years, vacuumed all extra
volumes of by-product and inventory levels have only started rising very recently.

The global economy is on a strong run and demand for glycerine is buoyant even at the high values seen over
the past months. Low prices contracted during the end of 2016 and in the first half of 2017 would have given glycerine
traders and end users a buffer in profit to afford paying the much higher prices that were on offer for the second half of
the year and still have a tidy bottom line for the exercise. Graph I on the next page illustrates the evolution of refined
glycerine prices in the USA and in Europe since 1995 and shows how contrary to previous spikes in glycerine prices,
the market levels have consolidated at high levels in the current cycle.

2 December 2017 Oleoline Glycerine Market Report / Issue N° 119


GRAPH I

USA and European Spot Prices for 99.7% Kosher


Glycerine Delivered Customer in Bulk, 1995 – 2017

c/lb EUR/t
USA market European market
120 1 800

1 600
100
1 400

80 1 200

1 000
60
800

40 600

400
20
200

0 0
Dec 95
Dec 96
Dec 97

Dec 99
Dec 00
Dec 01
Dec 02
Dec 03
Dec 04
Dec 05
Dec 06
Dec 07
Dec 08
Dec 09

Dec 10
Dec 11
Dec 12
Dec 13
Dec 14
Dec 15
Dec 16
Dec 17
Apr 10
Jun 96
Jun 97
Jun 98
Dec 98
Jun 99
Jun 00
Jun 01
Jun 02

Jun 04
Jun 05
June 06
Jun 07
Jun 08
Jun 09

Jun 11
Jun 12
Jun 13

Jun 15
Jun 16
Jun 17
Sep 10
Jun 03

Jun 14

USA - c/lb Europe - €/t

Source: HBI

This issue of the “Oleoline Glycerine Market Report” will review the state of each geographic market, including
a new section on Argentina and Brazil, in order to assess whether the price gains of the glycerine market during the
last months are sustainable.

December 2017 Oleoline Glycerine Market Report / Issue N° 119 3