Palm oil crisis in Indonesia : How will it affect glycerine prices in the global market

Glycerine prices in the global market have shown buoyancy owing to its feed prices and supply chain. According to ChemAnalyst, the prices of Glycerine were observed at USD 2060/ton, Ex-Taijung Pirok, Indonesia, on 8th April.

The feed required to produce Glycerine includes palm oil, sunflower oil, and coconut oil. After the invasion of Russia on Ukraine, the global demand for all forms of edible oil reached its peak and showed its adverse effects on the Glycerine global market. In the North American region, the prices of Glycerine came down at USD 2218/ton, DEL Midwest, USA, on 8th April. The slight surge in the prices occurred as the manufacturers were facing supply disruption from producing countries because of trade route disruption. Indonesia is facing palm oil crisis in the domestic market resulting in fluctuations in the prices of Glycerine globally. To cater to the domestic demand from end-use sectors, the government of Indonesia has imposed a policy that states that domestic palm oil producers should save and sell 20% of their products in the domestic market.

Moreover, the supply shortage of feed palm oil occurred as the gloomy effect of deforestation in Indonesia. Accompanying palm oil, the manufacturers are facing supply issues from soyabean oil producers due to dry weather conditions in South America. Asia-Pacific countries such as China, South Korea, and India dominate the Glycerine market due to their robust demand from downstream industries such as pharmaceutical, cosmetics, and personal care. In China, the demand for Glycerine escalated after the outburst of Omicron infection due to its applications in pharmaceutical sectors. Furthermore, Glycerine is used as a preservative for major commodities such as cereals, dry fruits, etc.

The increasing concern about the environment has forced various countries to use biofuel to reduce carbon emissions. Since crude Glycerine can be used to produce biofuel, the demand for Glycerine has increased, resulting in high prices of Glycerine. These factors have proportionally affected the prices of Glycerine and showcased its sporadic effects on the global market sentiments.

As per ChemAnalyst, the Glycerine prices may soar in upcoming weeks because of high feed (palm, soybean, coconut oil) prices and shortage of the same in the global market. Another facet that will affect Glycerine prices is the demand from downstream sectors.