Q1 ethanol contract prices concluded stable to slightly lower

08 January 2014 23:59  [Source: ICIS news]

LONDON (ICIS)--Most Q1 European ethanol contract prices have been concluded, with rollovers and slight decreases being representative of market movement, market participants said on Wednesday.

Prices for 96% beverage grade were assessed by ICIS at €70-75/hl FD (free delivered) France and Germany, down by €1/hl at the high end. Italian prices were assessed at €70-74/hl, down by €2/hl, while UK prices were assessed at £60-65/hl FD, down by £1/hl.

Prices for 99% industrial grade were assessed at €72-79/hl FD France and Germany, down by €1/hl at the high end. Italian prices were assessed stable at €78-81/hl, while UK prices were unchanged at £800-900/tonne FD.

Market participants said that most Q1 contract prices for 96% beverage grade were rolled over from Q4 2013, although some slight erosion was also recorded. The first quarter is typically a low-demand period for beverage grade, sources noted.

An Italian producer said that most of its contract prices for beverage grade had decreased by €1.00-1.50/hl. Sales in the fourth quarter were better than expected, the source added.

Another producer said that it had reduced its prices for long-term contracts in response to lower grain prices.

INEOS Enterprises' takeover of Sasol's 140,000 tonne/year 99% industrial grade plant at Herne as part of its acquisition of the producer's Germany-based solvents business has aroused considerable interest in the market.

If approved by competition authorities, the acquisition would leave INEOS Enterprises as the sole European producer of synthetic ethanol. The producer also operates a 340,000 tonne/year plant in Grangemouth, UK.

Sources said that the change of ownership has prompted concern among buyers, with some consumers of synthetic ethanol looking to broaden their supply strategy by taking more fermented product this year.

The January ethylene contract was concluded at an increase of €15/tonne.

The majority of Q1 contract prices for industrial grade were heard at a rollover. A buyer said that it had achieved reductions of 2-3%, but its prices remained within the assessed range.

A second buyer said that its prices have fallen below €70/hl FD Germany, but had been below €72/hl in the fourth quarter. An Italian producer said its prices are stable at €78-82/hl FD.

A UK reseller described a slow start to the year and felt that £900/tonne was above the prevailing market level. The source did not expect to see improvements in demand, but suggested that prices would remain stable.

Two sources noted that fuel ethanol producers have been seeking opportunities to sell product into the traditional market, which a producer said has eroded prices for 96% industrial grade ethanol. However, there has been little effect on 99% grade, the source said.

By: Samuel Weatherlake
+44 20 8652 3214

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