Global Glycerin Market Outlook Bullish despite Emergence of Omicron
- 01-Dec-2021 6:34 PM
- Journalist: Patrick Knight
Glycerin market has been on the stronger side for a major part of the year consolidating on the growing demand globally in the wake of worldwide economic recovery. Palm Oil (PO) and Palm Kernel Oil (PKO) are the critical feedstocks for Glycerin production globally, and consequently Malaysia and Indonesia are the key countries of production for the material.
Strengthening PKO prices in last few weeks had a direct bearing on the pricing for glycerin in Malaysia where prices have increased from USD 1360 per MT in October to USD 1450 per MT FOB Johor in November for USP grade.
Strong performance of PO and PKO throughout the year has been an important factor behind the continuous increase in prices of Glycerin. Globally, demand for Glycerin has been robust on the back of increasing consumption intakes from downstream cosmetics, pharmaceutical, and other key industries. Similar pattern has also been observed in SE Asia where demand has been continuously outpacing the supply keeping a bullish sentiment in the domestic market. Growing international demand has further pressurized the domestic production in Malaysia and Indonesia resulting in significant price increase for the material.
SE Asia has also suffered from production losses caused by stringent covid protocols across countries resulting in decline in production rates and hence weakening supply fundamentals and limiting the volume availability of the material for both domestic and international market.
Another key factor at play has been the turmoil in shipping industry which made it tougher for Asian suppliers to export material for European and American buyers. Limited availability of stocks in the West has exaggerated the prices where suppliers have enjoyed healthy margins while buyers had little to no reprieve as suppliers had the last say in the final pricing.
Short term market outlook for Glycerin appears to be bullish where demand is likely to continue outpacing supply on the back of strong consumption volumes from downstream industries. The speculation regarding new variant, Omicron, is further likely to test global supply chains which will alter the current market dynamics as countries will likely to become more cautious and restrictive disrupting smooth functions across critically important ports in key petrochemical producing countries. Early signs of changing market dynamics can be surmised from the sudden rise in the freight charges and shipping costs from Asia to the West which are likely to exaggerate Glycerin prices worldwide.
Glycerin is a highly versatile compound which finds its application in cosmetics, pharmaceuticals, pulp and paper and other key industries. Due to its varied utilization, there are several ways to produce glycerin, among them transesterification of fats and oils is the most widely used method.