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Ethanol Europe

EU ethanol producers reap rewards as prices buck commodities downturn

European ethanol producers have seen their fortunes improve markedly after the EU market turned in a six month period of sustained high prices between April and early October, in contrast to the depressed levels common to most of the rest of the commodities complex.

Germany’s CropEnergies has upped its financial forecast for the 2015/2016 marketing year to predict an operating profit of between €50-70mn, up from an operating loss of €11mn in the previous marketing year. The improved performance comes despite a downturn in sales by volume due to a more than six month closure of the firm’s 400,000/m³ Wilton, UK, bioethanol plant. The firm also produces bioethanol at plants in Wanze, Belgium, Zeitz, Germany and Loon-Plage, France with a combined capacity of 840,000/m³ of production, dehydration and rectification output.

Bioethanol was also a key contributor to an improved performance at Austrian bioethanol, sugar and starch firm Agrana in the first half of this year which otherwise suffered a downturn in sugar revenues thanks to weak international prices. The firm’s starch segment turned in March to August revenues of €352.7mn, up half a percent. Agrana produces bioethanol from a 210,000/m³/yr facility at Pischelsdorf in Austria and a 187,000m³/yr plant at Szabadegyhaza in Hungary in which Agrana owns a 50% stake.

Europe’s high tariff barriers on denatured and undenatured ethanol have helped shield the region from the weak levels seen in the international ethanol markets since the start of this year. Recent problems in eastern European production have robbed the central and eastern European market of barrels which would have otherwise been delivered to a tight ARA market suffering downturns in production at Vivergo as well as CropEnergies’ Wilton plant.

CropEnergies is less bullish about the longer term future for ethanol in Europe, tipping EU consumption to drop 5.4% this year YoY to 5mn m³ thanks to declining gasoline consumption. CropEnergies expects its own bioethanol sales volumes to reach around 1mn m³ in 2015/2016 or about a fifth of EU consumption. European ethanol lobby group Epure meanwhile has seized on Volkswagen’s recent diesel emissions testing scandal to fight European ethanol’s corner and push for increased uptake of E10 across the EU.

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MS – 08/10/2015

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