EU ethanol producers face demand drop and potential import competition

European ethanol producers are calling on the European Commission (EC) to address challenges that have arisen from shifting market conditions as a result of the COVID-19 pandemic.

A dramatic shift in demand combined with the possibility of imports could threaten the European industry, producers said.

In a letter sent to several commissioners on 10 April, the European renewable ethanol association (ePURE) highlighted the conditions facing the European industry as demand had shifted from fuel to industrial grade ethanol used in the manufacture of hydro-alcoholic gel, sanitisers and other disinfectants.

Across the EU, ethanol producers had increased production of ethyl alcohol for use as disinfectant and hand sanitisers, and producers had been working with national governments and the EU to maintain supply chains.

But the increased demand in industrial grade ethanol did not come close to compensating for the drop in demand for fuel ethanol, ePURE said, and some plants had had to reduce their production.

In its letter to the EC, ePURE said it had been concerned by unfounded requests to suspend tariff duties on ethanol imports.

“If granted, these measures could put in jeopardy our industry which, on the contrary, needs to prepare for the post COVID-19 resumption of economic activities. More than ever the EU ought to protect our sector that has proved of strategic importance to combat this health crisis and contribute to Europe’s independence in food/feed, energy and other biomaterials,” the letter stated.

The industry has asked the EC to consider measures on the fuel ethanol market to ensure that the sector could continue to be viable and would not be exposed to more damage when economic activity resumed. Such measures should not affect the supply of industrial grade ethanol, ePURE said.

In its letter ePURE outlined how prices in the European fuel ethanol market had dropped from €600m³ to below €400m³ in March.

The USA and Brazil, which accounted for 55% and 30% of the world’s ethanol production respectively, were faced with a similar situation, the letter said, with shutdowns, ‘force majeure’ declarations and record high stocks. This could flood an already depressed European market with low prices.