EU ethanol makers laud curb on 'unfair' US imports

Europe's ethanol industry trumpeted success in a campaign to end "unfair" US exports which have been hurting the bloc's own producers, even as Sweden's Lantmannen underlined "major uncertainty" over its biofuels busine

Industry group ePure said that a European Commission move to tax ethanol imports into the European Union relating to their initial origin would put "an immediate end to unfair trade practices" being operated by exporters from the US.

Although the commission last year tightened the duty regime on US ethanol imports, which were being brought in at lower rates applying to chemicals rather than to fuels, merchants found a separate loophole to get the biofuel into the bloc without triggering high tariffs.

They shipped the ethanol to Norway, where it was mixed with gasoline before being exported to the bloc under the Nordic country's favourable trade terms, avoiding high duties on US product.

However, the commission has decided to charge its interpretation of trade rules to tax US ethanol even if exported to the EU through another country.

'Major uncertainty'

This change "shields the EU industry from further injury" from the US exports, said ePure, highlighting a surge to 52m litres in EU imports from Norway last year, from 3m litres in 2012.

EPure trade managed Andreas Guth said that according to USITC trade data, "US ethanol exports to Norway even surpassed those to the Brazil every month between July and October 2013".

The comments represent a consolation to European ethanol producers, with EU officials last week agreeing to a 7% cap on blending of crop-based biofuels into transport fuels, below with the long-standing target of 10%. Ethanol in the EU is made mainly from wheat, and biodiesel from rapeseed oil, as opposed to the corn and soyoil popular in the US.

And that came as Lantmannen, the Swedish farm machinery-to-real estate co-operative, underlined a "major uncertainty" over its ethanol business, into which it has launched a strategic review.

"Ethanol prices are at a record low level, and the ethanol business remains under heavy pressure," said Per Olof Nyman, the Lantmannen chief executive.

'Remains a concern'

While the division's operating loss in the first four months of 2014 dropped to SEK6m, from SEK22m a year before, that represented in part a lower depreciation charge, after the co-operative in February took a SEK800m hit against the value of Norrköping plant.

"The present business situation remains a concern," the co-operative said.

"The challenging price position in the market has not changed to any great extent, and it is still proving very difficult for the operations to reach profitability."

The group also unveiled a tripling to SEK53m in its losses in agriculture, after a mild winter reduced demand for feed and for seed, reducing the prevalence of spring replantings of crops lost to frost.

"Competition in the agricultural market has been sharpening significantly over a number of years," Mr Olof Nyman said.

Tractor market growth

However, group earnings, excluding one-off factors, more than doubled to SEK38m, boosted by improved performances in agricultural machinery and, in particular, food.

Machinery sales rose 8% to SEK2.68bn, helped by 10% growth in the overall Swedish tractor market in the January-to- April period.

"Valtra remains the market leader, and Lantmännen has increased its total share of the market," the co-operative said.

While group sales dropped 12.7% to SEK10.5bn, this reflected the sale in June of Kronfagel Group.

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