07 November 2012 17:58 [Source: ICIS news]
By Sam Weatherlake
MUNICH (ICIS)--The prevailing mood among participants in the European traditional ethanol market who were attending F.O. Licht’s World Ethanol and Biofuels conference this week was one of uncertainty about prospects for 2013.
While this was partly due to an unclear outlook on demand, the main reason was the EU’s recent decision to grant Pakistan a duty-free import quota that will be in effect until the end of next year.
The European Parliament passed a resolution on 13 September 2012 imposing a duty-free import quota of 93,750 tonnes on undenatured ethyl alcohol of Pakistani origin.
The EU decided to grant the trade concession in response to flooding that affected extensive regions of Pakistan in July and August 2010.
The first 18,750 tonnes of ethanol will be permitted to enter the European market before the end of 2012, with the balance of 75,000 tonnes being allocated to 2013.
Some sources said that this could greatly increase availability in Europe, and thus depress prices, while others noted that Asian prices could rise in response, prompting Pakistani exporters to divert tonnes to other Asian markets.
The severity of the winter will be critical in determining how much of an impact Pakistani imports have on the European market next year, sources said.
High screenwash offtake would mean correspondingly high consumption of feedstock 96% Rectified Neutral (REN) grade ethanol.
However, a repeat of the mild winter of 2011-2012 would leave the supply chain relatively full, and any imports would need to displace domestic tonnes for use in other applications.
The long-term viability of synthetic ethanol was discussed on the sidelines of the conference by some participants in the 99% industrial grade market.
Sources noted the high cost and extreme volatility of feedstock ethylene this year, lack of investment in synthetic ethanol production capacity, and the growing preference among customers for sustainable material.
There has been considerable competition over the past year between European producers of fermented and synthetic ethanol.
Producers of synthetic ethanol have continued to offer tonnes at competitive prices, and have thus retained a large share of the market in spite of the record month-to-month changes in ethylene prices.
The 99% industrial grade market remains balanced and supported by strong demand for downstream products in the weeks leading up to the seasonal holiday at the end of the year. This is helping to offset the effects of macroeconomic weakness.
In addition, stricter requirements in terms of quality mean that European suppliers face less competition from imports than they do for other grades of ethanol, including 96% REN and 96% beverage grade.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections