Europe fuel ethanol output margins being eroded by softer prices

29 November 2012 10:52  [Source: ICIS news]

LONDON (ICIS)--Production margins in the European fuel ethanol market are being eroded by recent softer prices, sources said late on Wednesday.

“If I was a producer, I think I would need prices of €780/cbm [$1,013/ cubic metre] FOB [free on board] Rotterdam to just break even at the moment,” one broker said.

“Prices above €720/cbm FOB Rotterdam would be ideal,” one producer said.

According to ICIS data, spot T2 fuel ethanol prices are at €615-625/cbm FOB Rotterdam.

The last time fuel ethanol prices were above €700/cbm FOB Rotterdam was in September, when feedstock prices were boosted by a severe drought in the US over its summer.

However, sources do not expect fuel ethanol values to increase in the near future as demand is low and supply is healthy, with new production capacity due to start before the end of the year.

The 420m litre/year Vivergo plant based in Hull, the UK, is expected to start before the end of 2012, although one source said this has already been factored into market prices.

Market sources suggest that if fuel ethanol prices remain at the current low levels, some producers may be forced to lower operating rates.

($1 = €0.77)

By: Sarah Trinder
+44 20 8652 3214

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