Europe fuel ethanol values hit record highs on US drought

08 August 2012 17:17  [Source: ICIS news]

LONDON (ICIS)--European T2 fuel ethanol prices are at their highest levels since records began in December 2005, according to ICIS data on Wednesday.

European T2 fuel ethanol prices are assessed at €730-740/cubic metre ($901-914/cbm) FOB (free on board) Rotterdam, following recent increases in feedstock values as a result of a drought in the US and tightening supply in Europe.

Ethanol can be made from agricultural products such as sugar, corn and wheat.

The drought across the US farm belt has left corn crops damaged, therefore exerting upwards pressure on US fuel ethanol values, as well as European wheat prices. The resulting firmer wheat prices have contributed to robust European fuel ethanol values.

Prices were further supported by tight supply caused by low operating rates and a decrease in imports.

However, according to sources, T2 fuel ethanol prices are backwardated, with September values quoted at €708-725/cbm FOB Rotterdam, based on bids and offers.

It is thought the backwardation is because the new wheat crop is likely to enter the market in September, relieving pressure on feedstock prices, and expectations that supply will improve.

($1 = €0.81)

By: Sarah Trinder
+44 20 8652 3214

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