Europe fuel ethanol sector set for strong recovery in 2012
08 November 2011 13:40 [Source: ICIS news]
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BARCELONA (ICIS)--The European fuel ethanol market is expected to recover well in 2012 after the EU amends import tariffs, a consultant said on Tuesday.
Fuel ethanol producers in ?xml:namespace>Europe have faced challenging conditions in recent years, with high feedstock costs eating into profit margins. Speaking at the consultancy's World Ethanol & Biofuels Conference, Christoph Berg, managing director of Germany's F.O. Licht, said he believed that an uncertain regulatory environment has also hit trade in the region.
The delayed implementation of the European renewable-energy directive and the slow approval of voluntary sustainability schemes has led to consumers buying on a hand-to-mouth basis.
In addition, a strong inflow of competitively priced E90 (90%-ethanol blended gasoline) from the US has made it increasingly difficult for European producers to improve their margins.
E90 is subject to a lower import duty in the EU, while also benefiting from a blending credit in the US. This makes it competitive when compared with European T2 fuel ethanol prices.
However, Berg said the EU’s plans to amend the tariff under which E90 is imported into the region will result in the US import becoming less competitive and lead to a resurgence in trade for T2 fuel ethanol in Europe.
The outlook is not so positive for Brazil and the US, however, with Berg predicting a slowdown in their industries.
The change to E90’s import tariff in the EU is likely to result in slowing exports from the US, while investment in the expansion of ethanol production in Brazil is sluggish because it is thought to be too costly.
($1=€0.73)By: Sarah Trinder+44 20 8652 3214
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