European Ethanol Prices Remain Steady in October 2023, Bearish Outlook Looms

Hamburg (Germany): Ethanol prices in Europe have again maintained a stable trajectory in the week ending October 27, following the previous week's downtrend. Overall, amid fears of recession, moderate demand in the downstream solvents and chemicals industry has forced marketers to think about future uncertainty. Moreover, major Ethanol-supplying markets such as Brazil and the US have not witnessed any significant changes in their quotation prices for Ethanol.

Ethanol prices throughout the Eurozone have been hovering around USD 875 per metric tonne in the week ending October 27. Germany has registered Ethanol prices at USD 880 per metric tonne, CFR Hamburg, while in Belgium, Ethanol has been trading at USD 870 per metric tonne, FD Antwerp.

Italy, one of the major producers of the highest volume of the most widely consumed alcoholic beverages, has lost its crown because of floods and soggy springs. Moreover, Energy prices, especially Natural gas, have been on an uptrend for the previous two weeks, unlike the rest of the World's economies.

According to a survey, the Eurozone has been facing a broad-based economic shrinkage since business activities unexpectedly worsened this month. The flash eurozone Composite Purchasing Manager's Index (PMI) has fallen to 46.5, its lowest since 2020, signaling a contracting manufacturing sector and possible recession. The composite employment index also has fallen to 49.4 from 50.8 in September. Furthermore, the International Energy Agency (IEA) has released its World Energy Outlook 2023, which has revealed that the energy sector remained fragile. The global economy has been unsettled now, with an ever-present risk of further disruption. However, the Aviation sector in Europe, a potential key outlet for the corn and Ethanol industry, has been gradually adopting the technologies of sustainable aviation fuel. Furthermore, India's sugar export ban, US corn production surge to record level, and Government push to increase Ethanol blending with Gasoline has been expected to contribute to future prices.

Current EU policy has limited the room for growth. Michael Carus, the founder of research Institute Nova, has encouraged crop-based biofuel producers to switch from the transport fuel market towards the chemical market. It will help to organize the transportation of bioethanol from fuel to other fermentation products for the chemical industry.

Moreover, growing competition from the Electric Vehicles (EV) industry has been threatening the Ethanol market as biofuel. EU policymakers have been focusing more on EVs to cut road emissions, raising concerns among the biofuel leaders. However, according to David Carpintero, the director general of the Ethanol Trade Association, most consumers still favor comparatively cheaper combustion engine vehicles.