Market Insight
12 January 2026
Oleochemicals
The global oleochemical landscape in 2026 is being fundamentally reshaped by a persistent supply glut originating from China, a factor that is forcing Indian procurement officers to recalibrate their traditional sourcing strategies from Southeast Asia. For years, the trade flow between Indonesian refineries and major Indian discharge points like Kandla and Nhava Sheva remained the backbone of the domestic pharmaceutical and personal care sectors. However, as China’s domestic refining capacity for synthetic and bio-based glycerol reaches an all-time high, the resultant oversupply is spilling over into the Indian subcontinent. This surplus is not merely a regional pricing anomaly but a structural shift that is placing significant downward pressure on Refined Glycerine 99.5% and 99.7% grades, which are currently trading in a volatile range of USD 620 to USD 680 per metric ton CIF India.
While Chinese oversupply dominates the bearish sentiment, the supply side from Southeast Asia is contending with the delayed onset of a moderate La Niña cycle in early 2026. Historical data indicates that significant rainfall increases across Sumatra and Kalimantan typically disrupt the harvesting of fresh fruit bunches, which in turn tightens the availability of crude glycerine as a byproduct of biodiesel and fatty acid production. In the first quarter of 2026, Indonesian production volumes are projected to see a 4% dip compared to the same period in 2025, a contraction that would normally trigger a price rally. Yet, the sheer volume of Chinese exports—often priced aggressively to capture market share in Mumbai and Gujarat—is acting as a price ceiling, preventing Indonesian and Malaysian producers from passing on higher logistics and feedstock costs to Indian buyers.
The logistics of this trade are further complicated by monsoon-related port congestion in India, which traditionally peaks between June and August. In 2026, analysts anticipate that the convergence of weather-driven delays at Kandla and the influx of low-cost Chinese technical-grade glycerine will create a bifurcated market. High-purity USP and IP grade materials from Indonesia will likely command a premium of USD 40 to USD 50 per ton over technical grades, as Indian pharmaceutical manufacturers remain wary of the trace impurities often found in rapidly produced synthetic alternatives. Procurement strategies for the second half of 2026 must therefore prioritize quality-assured palm-based derivatives while utilizing the Chinese surplus as leverage for price negotiations on bulk technical requirements.
By the midpoint of 2026, the Indian market is expected to witness a significant displacement of traditional Southeast Asian technical-grade glycerine by Chinese inflows. Trade data for the first half of the year suggests that import volumes through Nhava Sheva are tracking toward a 7% year-on-year increase, driven largely by the cost-effectiveness of Chinese shipments for use in the detergent and textile sectors. Market benchmarks for Refined Glycerine in India have stabilized near the USD 640/MT mark, a notable departure from the USD 750/MT levels seen during the supply crunches of 2024. This stability, however, is fragile and depends heavily on the continued pace of China’s industrial output and its internal consumption of epichlorohydrin, which serves as a major sink for its glycerine production.
The year 2026 also marks a critical juncture for Indian domestic refiners, who are finding their margins squeezed between high-cost crude glycerine imports and low-priced refined exports from the north. To remain competitive, many are shifting toward long-term off-take agreements with Indonesian mills that offer carbon-certified and RSPO-compliant materials. For the savvy procurement officer, the 2026 forecast suggests a "wait-and-watch" approach for spot purchases in Q3, as the combination of normalized weather in Southeast Asia and continued Chinese overcapacity is likely to offer more favorable entry points for winter inventory builds.
Conclusion
In summary, the 2026 glycerine market is a study in counterbalancing forces. The deflationary pressure of China’s oversupply is effectively neutralizing the potential price spikes usually associated with La Niña-related disruptions in Indonesia. For Indian industries, this creates a buyer’s market for technical grades, though a cautious premium remains necessary for high-purity refined products. Monitoring the utilization rates of Chinese ECH plants and the port turnaround times during the Indian monsoon will be the primary keys to navigating this complex supply chain in the coming year.
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