Europe ethanol contracts stable-to-firm for October/Q4

21 October 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--European ethanol price increases were more successful for 96% beverage ethanol than for industrial 99% for October or the fourth quarter, due to slight differences in supply, demand and competition, market players said on Friday.

In mainland Europe, low-end business for 96% beverage edged up by €1.0/hl ($1.4/hl), taking values to €76/hl FD (free delivered) in France, €79/hl FD in Germany and €82/hl FD in Italy.

In the UK, minimum prices firmed slightly to £67/hl ($107/hl) FD. The slightly firming trend was driven by good-to-increasing demand and snug supply.

Aside from the general seasonal uptick in beverage demand ahead of Christmas, there was also talk of some pre-buying activity in certain European countries, such as France, in anticipation of the increased taxes on alcoholic beverages expected in 2012.

One fermented ethanol manufacturer said it had seen larger increases of €1–2/hl in France for October/the fourth quarter, and pegged its prices in a range of €77–80/hl FD. However, another supplier said that prices of €76–79/hl FD are more realistic.

Some sellers pegged minimum 96% beverage prices higher, at €80–81/hl FD in Germany and £69–70/hl FD in the UK, but this was not widely confirmed in the market. One of the suppliers, however, conceded that there were also some competitive values below this.

In Italy, while the general domestic price trend was slightly firmer – particularly for low-end business – due to ongoing limited supply, numbers either side of the range were also heard.

Prices below €82/hl FD were reported by one producer in northwest Europe, which rolled over its prices in Italy for October/the fourth quarter, although volumes were thought to be limited. 

However, one domestic supplier pegged prices higher, in a range of €83–87/hl FD, but this was not widely confirmed – even by other sellers.

In contrast to beverage grade ethanol, industrial 99% ethanol prices largely rolled over in the low-to-mid €80s/hl FD in northwest Europe, amid strong competition from synthetic players. This followed improved output from the third quarter and reasonable to slightly-lower downstream demand.

A few fermented ethanol producers said they increased industrial 99% prices in mainland Europe to €82–84/hl FD as a minimum for October/the fourth quarter, reporting prices of up to €87/hl FD. However, there was insufficient market confirmation to substantiate this.

In the UK, industrial 99% contract prices were generally stable in the low £900s/tonne FD and slightly above. Numbers below the range were also heard from one buyer, but this was seen to be more an exception rather than the norm. Prices for typical spot or smaller volumes are relatively steady, at £950/tonne FD this week.

However, these figures follow some recent downward price pressure on industrial 99% spot prices, particularly in the UK.

Industrial 99% spot prices had moved up in the third quarter due to production problems at one main synthetic producer, but since these were resolved, prices have been adjusted lower, to £950/tonne FD.

In contrast to northwest Europe, industrial 99% prices in Italy moved higher due to limited supply, according to domestic players. To reflect the firmer sentiment, the range was edged up by €1/hl, taking values to €87–89/hl. Prices in excess of €90/hl were also heard in a few cases, but thse were not widely confirmed.

Consumption is generally holding up well, largely unaffected by the wider global economic uncertainty, although some slight softening for industrial applications is noted.

Sellers maintain that domestic ethanol supply is sufficient, but there are still some ongoing limitations. Import volumes remain scarce due to generally growing demand outside the region, and a short sugar supply globally.

Although the latest European harvests, particularly for sugar, have been good, ethanol supply remains limited due to a raft of capacity constraints in Europe and ongoing favourable returns for sugar over ethanol.

In addition, while synthetic production is running better in the fourth quarter –compared to the third – sellers maintain that they are coming from a low-stock position which needs to be rebuilt.

Despite this, a few buyers said they have seen a general improvement in ethanol supply in the fourth quarter, adding that suppliers are pushing them to take more volumes than they require.

One customer, however, said that while supply is not as tight as it was in the third quarter, it still remains snug. As a result, the firm has had to spread its volumes among various suppliers to ensure sufficient coverage.

$1 = €0.73)

For more on ethanol visit ICIS chemical intelligence


By: Heidi Finch
+44 20 8652 3214



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