European T2 fuel ethanol values were in the low-€600s/cubic metre FOB (free on board) Rotterdam for most of the quarter amid low demand and healthy supply.
Market participants originally expected prices to increase following the European Commission’s introduction of a 9.6% duty to imports of US fuel ethanol.
However, some participants anticipated this move and had already stockpiled US product, therefore lengthening supply.
Prices gained support in April when Ensus announced it was to temporarily pause production at its 400m litre/year plant at Wilton, in the UK, as a result of poor market economics.
Lantmannen Agroetanol also announced it was going to reduce production rates by 25% at its 225m litre/year plant in Norrkoping, Sweden, also citing poor market conditions.
In May, sources said supply was tightening, with inventories decreasing and demand improving as the summer driving season approached. As a result, prices hit their highest levels since October 2012.
Arbitrages from the US and Brazil to Europe remain closed, but the US continues to purchase product from Brazil to fulfil its advanced biofuels mandate.
Updated to mid-May 2013