Excess supply in the Amsterdam-Rotterdam-Antwerp trading hub pushed the T2 ethanol price to Eur419.75/cu m FOB Rotterdam Thursday, not far off the lowest assessment ever recorded by S&P Global Platts at Eur416.75/cu m in January 2015.
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The European T2 ethanol price has been on a downward spiral since the start of the month, with Central and South American imports giving the coup de grace to an already oversupplied Northwest European market.
Domestic stocks have been high for some time, bolstered by the latest sugar beet campaign, at a time of seasonally weak demand.
On the other hand, imports from Peru, Costa Rica and Guatemala are not unusual at this time of year, but this time they have been met by much higher domestic inventories, incentivized by a contango in the market.
In addition, some cargo delays have resulted in volumes arriving in a much more concentrated timeframe than originally planned.
Tight ARA storage is adding to the woes of the market, limiting any potential buying interest, while increased throughput both for ethanol and gasoline is adding to ARA barge freight costs.
It does not help that some storage capacity in a Rotterdam terminal is also on maintenance, due to become available again in the second half of April.
As March comes to a close, the pressure has intensified as the first half of April is expected to be the period when the bulk of cargoes actually arrives.
A source estimated that March and April combined will see around 40,000-50,000 cu m of imports reaching European shores, a large volume for the European market standards and most of which will actually be fuel rather than industrial ethanol.
As a result, the situation is not expected to ease before May, when reduced imports, somewhat improved demand and seasonal maintenance are expected to offer some relief.
Still the forward outlook is not overly optimistic and even any demand increases will be met by stiff competition from biodiesel, which is also currently pricing at historical lows.
On the other hand, UK producer Vivergo is expected to be restarting their plant in Hull, which has been on extended maintenance since early December, despite the negative margin environment. Vivergo declined to comment.
Overall, any attempt to identify bullish factors in this market at the moment seems like clutching at straws and with margins firmly in negative territory, the only way market participants expect to see any recovery is by some capacity eventually coming offline