Europe fuel ethanol prices inch up on Vivergo’s closure, but capped by US values

LONDON (ICIS)–European fuel ethanol prices have risen slightly in the week after Vivergo announced its large UK plant would cease production by the end of September.

The company’s plant in Saltend in northern England has a production capacity of 420m litres/year.

European ethanol prices have risen by €9/cbm (cubic metres) at the top end of the range to €486-494/cbm FOB (free on board) Rotterdam.

According to Vivergo’s managing director on 6 September, the UK’s slow pace in rolling out of E10 – a petrol mix containing up to 10% ethanol – was the reason to blame for the plant’s closure.

According to several sources, US fuel ethanol prices are currently capping ethanol prices in Europe, which some linked to uncertainty over an upcoming court ruling and EU decisions over US fuel ethanol anti-dumping duties.

An investigation by the European Commission – the EU’s executive body – into US anti-dumping duties is being actively pursued, sources connected to major producers have confirmed.

The European Court of Justice is due to reach an opinion on 3 October, while a separate Commission investigation into the matter could be concluded before or after that date.

US prices currently capping those in Europe could also be attributed to increased exports from the rest of the Americas and enough domestic volumes readily available to meet demand.

“It is not clear if it is sentiment or the underlying structure of the market,” said one source, pointing out that anti-dumping duties are in place for now in any case and players do not expect them to be removed.

“It would be the death of European ethanol production if it happened,” they said.

A source involved in buying said they had been expecting a further drop in prices until Vivergo announced it had stopped running its UK ethanol plant last week.

They said they were “expecting bullish moves off back of this, but it hasn’t been the case”.

The paper market is relatively flat over the coming months, with levels around €486/cbm FOB Rotterdam to just under €500/cbm over the coming quarters.

Pictured: Vivergo’s plant in Saltend
Source: Vivergo