ABG, Inc., an Adayana company, in conjunction with the United States Soybean Export Council has completed a research study of the glycerin market. The team gathered historical data related to the domestic glycerin market including domestic production and prices, European production and prices, petroleum production and consumption, and fatty acid production. Although some of the data were closely correlated, it is difficult to build a model capable of inferring the data’s explanatory power on American glycerin prices.
The increase in demand is being discussed as about 50m-100m lb/year, although various players’ estimates differ. The personal care products sector is the largest application for refined glycerine, growing at 3%/year alongside the appetite of “baby boomers” for skin-care creams as the generation nears retirement age.
As per a May 2013 article published by ICIS, wider demand for refined glycerine is being driven by healthy buying in the personal care sector and new chemical routes to monopropylene glycol (MPG), where refined glycerine can be a feedstock, by increased use in the antifreeze markets and by new and evolving uses in heat transfer systems.
Additionally, new end-use in engine coolants are gaining attention and offering demand growth estimated by industry participants to be as much as 10m lb of new consumption by the end of 2013.
A set of specification standards for a glycerine grade to be used in engine coolants has been ratified by the ASTM International (formerly known as the American Society for Testing and Materials), market sources confirmed in the third quarter of 2012. The first specification for ASTM Engine Coolant Grade Glycerine (D7640) was approved and released for industry-wide publication in August, ASTM sources said.
Several ASTM engine coolant glycerine specification sets continue to be in various stages of development, with expectations that light and heavy-duty vehicle coolant systems using glycerine will enter phases of commercialisation in 2014.
Refined glycerine of 99.5% purity will be one of the blendstocks for several of the coolant systems.
Domestic glycerin prices are negatively correlated with the European glycerin market which indicates the U.S. market is vulnerable to fluctuations in global supply. Another remarkable observation is the small, but positive correlation between American refined glycerin prices and domestic refined glycerin supply. Surprisingly, this correlation does not follow the logic that more supply will lead to lower prices.
Petroleum production and consumption impacts domestic refined glycerin prices, especially production in the Middle East. High petroleum production in the Middle East has historically led to depressed refined glycerin prices. The interpretation of this correlation is that increased petroleum production increases the supply of substitutes for refined glycerin.
Glycerin is a byproduct of biodiesel, soap, and fatty acid production. Therefore, the supply of glycerin is determined by the demand for these primary products.
- As the soap industry has traditionally provided most of the glycerin for the domestic market, the soap manufacturers also own most of the glycerin refining capacity in the country.
- Global biodiesel production has significantly increased the amount of glycerin on the market in recent years. This has shifted glycerin production to countries that were not traditionally large producers.
- Because glycerin refining capacity is limited, depressed prices prevent construction of new refineries leading to a global crude oversupply crisis.
- The glycerin market is a relatively small market on a worldwide basis. Current global production is about 2 billion pounds and is valued at $1 billion annually.
- Since the glycerin market is small on a global basis, there is little market information, making it difficult
to establish a world “spot” price for the product. This helps to explain some anomalies in the international market. For example, the United States is an importer and an exporter of both crude and
refined glycerin. - The European Union, United States, and Southeast Asia are the main regions which produce glycerin.
- Although small, the glycerin market is global and vulnerable to shocks in international production.
- Development of new renewable fuel policies in India, Canada, and South America ensures crude glycerin supply will increase well into the future. As global supply increases, research and development for new uses of glycerin will be needed to handle the surplus of crude glycerin.
The American market for refined glycerin fluctuates from year to year, but generally stays within a range of 450–500 million pounds annually. Furthermore, the production of refined glycerin is relatively stable over time at just under 400 million pounds annually.
Although there doesn’t appear to be any drastic changes in the overall production and consumption of refined glycerin in the United States, there has been a change in the suppliers and refiners of glycerin over the past five years. Dow Chemical, the only manufacturer of synthetic glycerin, shut down its 140 million pound plant when prices dropped to unprofitable levels. Meanwhile, some biodiesel producers have added refineries on their plant site to process the glycerin from their biodiesel operations.
