Biofuel worries are universal

www.biopact.comThe Asian biofuel markets face big challenges, according to a report on ICIS news. Anu Agarwal has been talking to producers of ethanol and biodiesel in and around Singapore and discovered they are as concerned about the prospects for their industry as delegatesat the World Refining Association’s 2006 European Biofuels Forum in Warsaw, yesterday and Tuesday.

(Full disclosure: I work for ICIS)

Anu, says

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Competition with lower petrodiesel prices in the recent past, rising feedstock costs, and the problems associated with handling and selling by-products like glycerine have emerged as key challenges, they noted.

They are being hit by falling oil prices, which makes traditional gasoline more attractive and also by rising methanol prices up about 70% to $460-480 CFR (cost & freight) Southeast Asia.

Anu adds:

Biodiesel spot prices have varied between $730-750/tonne FOB (free on board) Malaysia, mostly heading for European destinations.

But suppliers believe that the EU’s target of 5.75% biofuel in the motor fuel pool by 2010 will help stimulate demand.

On a first reading of the story it is interesting that the potential for new uses of glycerine as a chemicals feedstock for biomethanol are not being promoted particularly strongly in the region. If they started making biomethanol, they’d have a production hedge and could avoid buying methanol from third parties. I’m not so surprised that the news that the EUis going to fall well short of its 5.75% target has not got as far as Singapore’s biofuel makers.

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