Market Insight
25 January 2026
Oleochemicals
As we move through the first quarter of 2026, the resurgence of a moderate-to-strong La Nina event is no longer a meteorological curiosity—it is a direct threat to global oleochemical stability. For refined glycerine buyers, the implications are immediate and expensive. Unlike the droughts associated with El Nino, La Nina brings excessive rainfall to the heart of the palm oil world: Indonesia and Malaysia. While more rain can theoretically support long-term fruit growth, the short-term reality is a logistical nightmare. Flooding in the Kalimantan and Sumatra regions is currently disrupting the harvest of fresh fruit bunches (FFB) and, more importantly, severing the road links between palm mills and refineries. When the feedstock cannot reach the refinery, the production of refined glycerine halts, regardless of how much crude material is theoretically available in the system.
The most visible impact of the 2026 La Nina is not at the plantation, but at the major export terminals. Heavy, persistent tropical storms have reduced port operational hours in Jakarta and Surabaya by an average of 20% over the last three months. This has led to a backlog of vessels and a sharp spike in demurrage fees. For B2B traders, the price of refined glycerine is being pushed toward the 1,150 USD/MT mark, not because of a lack of molecules, but because of the "friction" of moving them. Freight rates for ISO tanks from Southeast Asia to the Indian subcontinent and Europe have climbed by 12% since December 2025 as shipowners demand premiums for the increased turnaround times. Buyers who did not secure "priority loading" clauses in their 2026 contracts are finding their shipments pushed back by weeks as Tier-1 suppliers prioritize their most strategic partners.
La Nina creates a unique market distortion where the price of crude glycerine remains relatively stable while the price of refined glycerine skyrockets. This is because the weather-induced disruptions hit the high-value distillation plants hardest. Refineries require a steady, uninterrupted flow of electricity and steam, both of which are vulnerable to the infrastructure failures common during extreme rainfall events. In Indonesia, we are observing a widening spread between crude and refined grades, as refining capacity utilization has dropped to 65% in some flood-affected provinces. This "Refining Gap" is the primary driver of price volatility in 2026. Speculative traders are moving into the market, betting on further supply-side shocks, which further decouples the price of glycerine from the actual cost of palm oil. For a procurement manager, this means the traditional correlation models used for pricing are currently broken.
To survive the 2026 volatility, the "Just-in-Time" inventory model must be discarded in favor of "Just-in-Case" buffer stocks. We are advising clients to maintain at least 45 days of refined glycerine inventory at their local manufacturing sites to bridge the gap during peak monsoon surges. Furthermore, the selection of a supplier must now include an audit of their "Weather Resilience Plan." Does the refinery have independent power generation? Do they have multiple transport routes to the port? Is their warehouse elevated above the 100-year flood line? These are no longer secondary questions; they are the baseline for risk management. In 2026, the most expensive glycerine is the one that never arrives. By paying a slight premium for suppliers with robust infrastructure and diverse port access, companies can avoid the catastrophic costs of a production line shutdown during the height of the La Nina rains.
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