Increased global biodiesel production to lengthen glycerine markets in 2020

BARCELONA (ICIS)–An increase in global biodiesel production is likely to further lengthen the world’s glycerine supply glut in 2020 as higher biodiesel mandates increase the supply of crude glycerine by-product.

Source: FLPA/Shutterstock

The oversupply is likely to weigh on the wider glycerine market, diminishing margins for refined glycerine producers as demand from new applications are unable to absorb the volumes, according to sources.

Despite growth in certain new applications like epichlorohydrin (ECH) in key markets like China, the macroeconomic slowdown in the global market against the backdrop of the US-China trade war may decrease demand for ECH in the coming year.

The sources were speaking on thesidelines of the ICIS World Oleochemicals conference.

BIODIESEL GAINS GROUND 
One factor market participants are watching is the growth of renewable diesel production around the globe.

Renewable diesel uses waste feedstocks to produce diesel but does not produce crude glycerine as a by-product.

Indonesia plans to increase its biodiesel mandate for the transport sector from B20 to B30 in 2020, while Malaysia is targeting an increase from B10 to B20.

Increased biodiesel blending mandates in southeast Asia are largely driven by government efforts to improve energy independence and increase palm oil production in the region.

The US will increase its biodiesel blending mandate from 2.1bn gallons to 2.43bn gallons in 2020 and 2021.

The EU is also increasing its biodiesel mandates at varying rates.

Brazil increased its mandate from B10 to B11 as of September.

Glycerine is mainly used in personal and oral care products such as skincare creams, toothpastes and mouthwashes, as well as food products either as glycerine directly or one of its derivatives, such as glycerol mono-stearate.

The 12th ICIS World Oleochemicals Conference runs in Barcelona on 28-29 October.

Focus article by Lucas Hall