Glycerine Prices Likely to Rebound Across the Globe as Winter Demand Drives Recovery
- 16-Oct-2023 6:30 PM
- Journalist: Yage Kwon
In a surprising turn of events, Glycerine prices across the globe witnessed an abrupt decrease, largely influenced by a confluence of factors that had sent the market reeling. However, as the season transitions into winter, Glycerine prices are now rising, driven by increasing seasonal demand and changing dynamics in the raw materials market. The Glycerine industry is intricate and heavily reliant on various factors, including raw material costs, downstream sector demand, and international market conditions. These elements had combined for a while to push Glycerine prices to a low point.
The declining cost of palm oil, a primary raw material, significantly contributed to the sharp drop in Glycerine prices. Indonesia and Malaysia, two major producers and exporters, play a crucial role in the global Glycerine market. The decrease in palm oil prices had a ripple effect on Glycerine costs. Palm oil prices were under pressure due to various factors, such as oversupply and fluctuating demand, resulting in the softening of Glycerine prices. Concerns about weak demand and increasing production led palm oil to reach its lowest level in nearly three months, with additional pressure from losses in soybean oil affecting tropical oils.
The Glycerine market faced increased downward pressure due to decreased demand from downstream industries. This reduced demand from sectors such as cosmetics, pharmaceuticals, and food production led to an oversupply of Glycerine, which, in turn, was aggravated by ample existing inventories in both domestic and international markets, causing the depreciation trend to worsen. In addition to these factors, ample inventories of both raw materials and Glycerine kept the market weak. Glycerine and palm oil stockpiles further fueled the oversupply situation, creating an environment where prices continued to fall.
In an interesting correlation, there was also a decrease in crude oil prices during the same period. This is significant because crude oil serves as the primary raw material for producing crude Glycerine, which constitutes approximately 80% of Glycerine production. The decrease in crude oil prices offered another reason for Glycerine prices to move downward. Oil prices experienced a drop in early trading on Friday following a recent surge. This drop was due to profit-taking and the anticipation of increased supplies from Russia and Saudi Arabia, which overshadowed expectations of strong demand from China during its Golden Week holiday. On Thursday, oil prices had eased by about 1% as traders locked in profits following a sharp rise to 10-month highs. Some concerns also arose regarding the impact of high interest rates on oil demand. Russia had recently relaxed its ban on fuel exports, which was implemented to stabilize the domestic market, and analysts do not foresee these restrictions lasting long due to potential effects on refinery operations and customer relations. The decline in oil prices can be attributed to profit-taking, with traders keeping a close eye on a Federal Reserve decision that could significantly influence the health of the U.S. economy.
However, as the season changes and winter approaches, a transformation in the Glycerine market is becoming evident. Glycerine prices are now on the upswing, driven by the onset of seasonal demand. The winter months traditionally witness a surge in Glycerine consumption as it is used in a variety of products, such as skin care items and antifreeze formulations.
With the temperatures dropping and the holiday season approaching, the demand for Glycerine in various applications is expected to rise, naturally pushing prices higher. Manufacturers, especially in the cosmetics and pharmaceutical industries, are gearing up for increased production to meet seasonal demands.
Furthermore, the global Glycerine market may also find some support from changes in the raw materials market. Palm oil prices are anticipated to stabilize, and any upward movement in crude oil prices would also contribute to an increase in Glycerine costs.
In conclusion, the Glycerine market has experienced a significant price decline, driven by various factors, including falling palm oil prices, decreasing downstream sector demand, and declining crude oil prices. However, as winter approaches, Glycerine prices are beginning to rebound due to increasing seasonal demand. The market will likely continue to see a positive price shift as the winter season progresses, with the potential for further support from developments in the raw materials market. Businesses and consumers should monitor these trends as they may impact product prices and availability in the coming months.