Europe's biggest ethanol plant to shut up to 4 months end-May

Europe's largest biofuels refinery, Ensus' 400,000 cubic meter/year plant at Wilton in northeast England, will be shut at the end of May for up to four months on poor margins, plant commercial director Grant Pearson said Monday.

The refinery has been hit by lower-than-expected demand in Europe, an oversupply of ethanol blends from the US and a slow roll-out of sustainability requirements in EU member-states, Pearson said.

Pearson said the shutdown could be from 2-4 months.

"We decided that for the time being, with these margins it's no longer profitable to be operating," he added, without given further details on Ensus production economics. "Given the fact that we have one of most efficient production processes in Europe and we are forced to take this step shows how the situation for the industry is right now."

On the demand said, the slow introduction of a higher ethanol blending mandate in Germany has been bearish for European producers.

In addition, the uneven implementation of sustainability requirements in EU member-states has been hindering trade, specialists say.

"So far only Germany and Austria are fully onboard with sustainability. All other big markets like, UK, France, and the Netherlands have delays and that is very concerning," Pearson said.

A slow introduction of standardized sustainability requirements is a concern for refiners as they find it difficult to retail their product across borders, ethanol experts say.

"The European Commission is very late with their approval on sustainability schemes and this has been a very big disappointment for us," Pearson said.

Concerning high feedstock prices, Pearson said had demand for ethanol been there, prices would follow to compensate for larger costs upstream.

"We also saw that while [feedstock] wheat almost doubled year-on-year, the price for the protein that comes out as a byproduct has increase only 50% to 60%," he said.

Despite current bleak margins, Ensus expects all these factors to be short-lived.

"We fully expect the market to improve in the coming months as implementation of the regulatory framework for biofuels catches up with the agreed EU legislation," Ensus said in a statement.

The plant restarted operations on April 28 following a three-week maintenance period.

The facility, which began operations at the beginning of 2010, has a production capacity equal to about a third of the UK's ethanol demand.

It produces ethanol from wheat.

source: platts