Subscriber note - ICIS is considering removing the export quote from the Ethanol - Fuel (Europe) report, as Brazil is no longer exporting ethanol at the levels seen in 2006-2009. Subscriber input is welcome and should be sent directly to the editor of the report.
There are varying opinions on activity in the European fuel ethanol market this week.
Some believe that activity in the T2 fuel ethanol markets is picking up. One source notes that there are currently between two-to-three trades each day and says that demand has increased due to the summer driving season.
However, another source says that activity has not necessarily increased but that market participants are now doing business more publicly instead of outside open market trading.
Prices for German renewable energy directive (RED) certified T2 product are quoted in a range of €620-630/CBM FOB Rotterdam while standard non-certified T2 prices are thought to be between €605-615/CBM FOB Rotterdam.
It is thought that the price gap between German RED certified T2 and standard T2 material is eroding. Some say that this premium for German RED certified T2 will eventually disappear altogether as more countries transpose the RED into their legislation and increased amounts of RED certified feedstocks become available.
The T1 fuel ethanol market remains very illiquid with sources finding it difficult to gauge prices.
T1 supply is tight due to lack of imports as demand is practically non-existent because of the presence of competitively priced E90 (90% ethanol blended gasoline) product.
E90 continues to benefit from the US Volumetric Ethanol Excise Tax Credit (VEETC) and a lesser import duty into Europe which means it remains attractive to buyers due to its low prices.
Sources say that the VEETC is due to expire by the end of the year and that if this happens, E90 will become less competitive and European fuel ethanol production could increase.
The future remains uncertain according to sources and some say this means that buyers are not purchasing material ahead.
It is thought that T1 prices have been volatile since the commodity market slump seen last week due to fluctuations in corn and gasoline values.
T1 prices are assessed in a range of $830-840/CBM FOB Rotterdam while E90 is believed to be trading anywhere between $700-770/CBM FOB Rotterdam.
($1=€0.70)
This week on ICIS news ( www.icis.com ):
10/08/11 Crude futures rise on interest rate pledge by US Federal Reserve
10/08/11 US midwest spot gasoline bid higher on refinery outage
09/08/11 Brazil ethanol spot prices hold steady on thin trade
03/08/11 Brazil ethanol trader Copersucar cancels initial public offering
03/08/11 US ethanol stocks rise 0.2%; production up slightly
