CORRECTED-European Ethanol Makers Fear Influx from U.S. and Brazil
by Sybille de La Hamaide (Reuters) … Ethanol consumption slumped globally due to COVID-19 crisis; EU makers fear cheap imports when demand resumes; Called the European Commission for action, possibly tariffs; U.S., Brazilian ethanol exports surged in past months — An influx of cheap U.S. and Brazilian ethanol threatens Europe’s producers as businesses resume operations, companies have told the European Commission, urging it to act to protect an industry reeling from depressed demand.
Sharp falls in driving and air travel due to the coronavirus pandemic have hit the biofuel sector worldwide, forcing companies to dtastically cut output and prices, notably in top producers the United States and Brazil.
The two countries account for about 55% and 30% of the world’s ethanol production respectively.
European producers of ethanol, made from grains or sugar crops, now fear that record stocks in these countries could prompt them to further boost their shipments to Europe when confinement measures are lifted.
They asked the European Commission for quick action, including potential tariffs.
“The threat of injury is blatant,” EU ethanol makers’ lobby ePure said in a letter to the EU executive. “Record high stocks could flood at low prices an already depressed European market.”
The EU could raise tariffs on ethanol fuel temporarily to allow the industry to recover without being pressured by cheap imports, Sylvain Demoures, head of French ethanol makers lobby SNPAA, suggested.
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Brazilian ethanol would benefit from the sharp devaluation of the Brazilian real, which is trading near an all-time low against the dollar.
It makes exports particularly attractive for Brazilian mills at a time when local demand is down around 40%, Matheus Sleiman da Costa, a Sao Paulo-based sugar and ethanol analyst at INTL FCStone, said.
Brazilian customs data released on Monday showed that exports of alcohol, a category where ethanol makes up the bulk of volumes, nearly trebled in April at 134.3 million litres, from only 46.1 million litres a year earlier. READ MORE
