Europe fuel ethanol production margins still weak despite price rises

27 March 2014 10:58 Source:ICIS News

LONDON (ICIS)--Although European fuel ethanol values have firmed above levels of €500/cbm FOB (free on board) Rotterdam, margins remain weak for producers, according to sources late on Wednesday.

T2 fuel ethanol prices were at €515-530/cbm FOB Rotterdam, up by €20-30/cbm from the week previously.

“Producers need better prices than this level. It’s still a poor level for producers,” one seller said.

Wheat and corn are predominantly used as feedstock for fuel ethanol production in Europe, and one source suggested that those producers using corn may be able to make a small margin.

“Market economics have got better, especially for corn. Corn is much lower than wheat. At these prices there may be a small margin [for those using corn] but this depends on dried distillers grains and solubles (DDGS) prices. It’s not the same for those using wheat,” another source said.

DDGS is a by-product of fuel ethanol production that can be sold into the animal feed market, potentially boosting production margins.

By Sarah Trinder