„Europe's golden age for glycerine is over.“

Tobias Thiel, Senior Product Manager at CREMER OLEO, expects the European market for glycerine will not return to its former size even after the end of the COVID 19 crisis. This is the conclusion of his presentation at the symposium "Vegetable Oils in a Circular Economy" of the German Society for Fat Science. Here is an interview with his most important statements:

 

The demand for vegetable glycerine has been increasing for years. Why do you think the European market is becoming more difficult?

Because the glycerine market is increasingly changing from a buyer's to a seller's market. This is understandable if you look at how vegetable glycerine is produced: it is created as a by-product in a process known as transesterification, mainly in biodiesel production. In addition to 90% biodiesel, 10% vegetable glycerine is always produced in the manufacture of the fuel. With this percentage distribution, it is clear which product is leading the way. Thus, the biodiesel boom of recent years has automatically led to a large supply on the glycerine market. If more and more alternative drive technologies and fuels now become established on the market, biodiesel production from transesterification will fall and with it automatically the amount of glycerine on the market.

Greener mobility leads to less glycerine on the European market?

Quite right. We currently see five major trends that are reducing biodiesel consumption: In road and air transport, new, higher-quality fuels are coming onto the market in the form of HVO and SAF, some of which are covered by EU's "Fit for 55" climate package. In Germany, the country with by far the largest share of diesel in the passenger car fleet, the number of registered e-vehicles is rising rapidly. In addition, a favorable ethanol price here can influence the volume of biodiesel on the market, as fuel manufacturers can use compensation models to partially offset the proportion of their bio-blend in diesel (biodiesel) or gasoline (ethanol, e.g. as E10).

In terms of volume, however, heavy truck traffic is even more significant than the passenger car sector. Here, the fuel alternatives are LNG and CNG in addition to electrification. The last trend, from biodiesel production itself: New plant-based raw materials are gaining in importance worldwide, for example from intercrops and algae. In addition, it is increasingly being produced on the basis of waste. They come, for example, from used cooking oil (UCO), slaughterhouses (tallow), fir wood (tall-oil) or palm oil production (palm-oil mill effluent, POME). This is sustainable, but these raw materials cannot be used to produce high-quality glycerine that later meets food grade, kosher, halal or organic criteria.

For the growing demand for high-quality glycerine grades for food, cosmetics or pharmaceuticals, there is less and less product from European production available.
Tobias Thiel, Senior Product Manager Glycerine

On the supply side, you see declining glycerin volumes. How do you assess global demand?

It has been rising continuously for years. In the technical sector, simple grades can also be used well. But wherever quality requirements continue to increase and sustainability requirements become stricter, as in the food, cosmetics or pharmaceutical sectors, the gap between growing demand and declining supply is widening. The quantity of glycerine from European raw materials such as rapeseed is capped. We are becoming increasingly dependent on imported products.

Would oleochemical glycerine be a way out?

Oleochemical glycerine is not produced in biodiesel but in fatty acid, fatty alcohol and soap production, again with 10% of the vegetable oil used. The global demand for oleochemical products is continuously increasing. It is hardly subject to political influence and is thus purely demand-driven. These are very good omens! But the oleochemical share of the glycerine market is only about 25% and is as of now far from being able to compensate for the volumes from biodiesel production.

What do companies that use glycerine have to be prepared for?

The reduced local and international availability of glycerine is already having consequences today - and these will increase. Not every type of glycerine will be available year-round as usual in the future. Companies will have to prepare for higher and more volatile prices, annual contracts will be the exception.

We are pursuing three strategies to secure our supply chains for glycerine.
Tobias Thiel

What is CREMER OLEO doing to nevertheless contribute to the long-term growth of its customers?

We are doing everything we can to secure our customers' supply chains in the future. To this end, we are currently pursuing three strategies in parallel: We are diversifying our supply chains. For example, we are currently expanding our large and stable global supplier network for vegetable glycerine in order to securely map the supply chain from the country of cultivation to our customers' European production. We are also strengthening our sourcing in Southeast Asia and Latin America. At the same time, we are investing in our transport infrastructure in Europe, in warehouses and tanks, in order to be able to respond even more individually to the needs of our customers and to create supply security. The keyword here is customized supply chains. And last but not least, we will be adding a glycerine substitute to our product portfolio in the course of the year in order to diversify our customers' raw material base and also support them in their future growth.

Senior Product Manager Glycerine at CREMER OLEO: Tobias Thiel

Tobias Thiel

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