Europe fuel ethanol values increase on tight supply, firm feedstocks

25 July 2012 17:39  [Source: ICIS news]

LONDON (ICIS)--European fuel ethanol prices have increased on high feedstock prices and tightening supply, sources said on Wednesday.

US corn values have been firm as a result of the drought across parts of the country.

Although European fuel ethanol is produced from wheat or sugar beet, rising corn values have exerted upward pressure on wheat prices, resulting in higher European fuel ethanol prices.

The increase in feedstock values has diminished production margins and therefore some producers have opted to lower operating rates, tightening market supply.

“Things are tightening due to less production in Europe as a result of grains going up,” one producer said.

In addition, the arbitrage from the US remains closed, meaning few fuel ethanol imports are presently arriving in Europe.

“The European market is short and is not able to be covered by European production, although in theory it should be. More product is needed but there aren’t any imports,” said a source.

According to ICIS data, spot European T2 fuel ethanol prices are at levels of €720-730/cbm ($867-880/cbm) FOB (free on board) Rotterdam this week, an increase of €10/cbm from the previous week.

($1 = €0.83)

By: Sarah Trinder
+44 20 8652 3214

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