03 November 2010 17:10 [Source: ICIS news]
GENEVA (ICIS)--Ethanol demand in ?xml:namespace>
By next year,
He was speaking to delegates at the 13th annual World Ethanol Conference in
In 2010, following the global economic crisis, “ethanol demand has come back and is developing healthily”, said Berg.
However, during the second half of this year, Berg said raw material costs started to increase and ethanol manufacturers lost margins.
Because of poor crop harvests around the world, agricultural-based feedstock costs have rocketed, he said.
He added that high cereal prices could last into 2011, while gasoline prices remain relatively steady.
In addition, ethanol’s competition with sugar has intensified, making it more profitable to sell sugar rather than to convert it into ethanol, Berg said.
As a result, Brazil's exports of ethanol to Europe have been capped, contributing to an expected increase in ethanol demand in Europe, which traditionally benefits from imports from
On top of this, new EU regulations for agricultural and manufacturing processes will be implemented in 2011, which will require the whole ethanol value chain to be certified, said Berg.
This is part of the EU's renewable energy directive, which calls for, among other things, 10% of biofuels to be used in the transport sector by 2020.
“Ethanol will move into uncharted water in 2011, with a challenging cost structure, fragmented regulations and possibly another attack of the food-versus-fuel debate,” he said.
However, it is not all doom and gloom, Berg said, as ethanol prices are expected to remain firm and produce decent returns.
Last month and in the fourth quarter, ethanol prices in
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