Conditions ‘very hard’ for EU wheat ethanol groups
Market conditions for European wheat-ethanol producers, many of which have closed plans, remain “very challenging” despite anti-dumping measures against imports from the US, Lantmannen said.
The Swedish-based agricultural co-operative, owned by more than 33,000 farmers, said that while its own ethanol operations had reduced losses to SEK 22 m in the January-to-April period, this was largely down to efficiency improvements at its main ethanol plant.
“The market situation is very challenging,” said the group, one of the ethanol producers which in Europe use wheat as their main feedstock, rather than corn as in the US.
“Market conditions have deteriorated in the first four months of the year,” despite a European Commission move in February to impose an anti-dumping duty of E62.30 ($81.80) per tonne on imports of US bioethanol intended for use as fuel.
The tariff – which US ethanol producers have complained violates EU law, and have pledged to fight with “every challenge available to us” – followed the closure last year of a loophole which allowed ethanol/gasoline blends to be imported as chemicals, with lower duty rates.
However, the levy “did not strengthen the price of ethanol to the extent expected, which has resulted in production standstills at plants in Europe”, said Lantmannen, which in April shut its smaller plant, responsible for 25% of its production.
“Grain prices are still at a level which, in combination with excess ethanol production, is squeezing profitability in the business,” with a 10% drop in EU fuel consumption, year on year, adding to market pressure.
“Several ethanol producers are failing to achieve profitability, and even larger competitors in the UK and the Netherlands have taken the decision to reduce or completely shut down their production.”
Mothballed sites include the Ensus site in northern England, the European Union’s biggest ethanol plant, which has surprised many observers by remaining closed despite a pullback of some 10% in UK wheat prices since it shut two months ago.
Output at the new Vivergo site nearby, with capacity of similar size, remains at low levels amid rumours of teething troubles.
Source: Extract from article in Agrimoney.com