Associated British Foods has, after years of losses and teething troubles, flagged an improvement at its Vivergo ethanol plant – although market sources yet foresee little chance of an immediate restart of the rival Ensus site.
ABF, the sugar-to-clothes retailing group, said in an update on its operations for the September-to-February half that the Vivergo plant - originally built in a tie-up with energy giant BP and US-based chemicals conglomerate DuPont – had "operated well".
The comment - which Agrimoney.com has heard follows a history of start-up problems, ranging tuning the plant to appropriate feedstock to drier malfunctions – had, combined with relatively resilient European ethanol prices, "led to some improvement in [Vivergo's] result" in the half.
And ABF was upbeat over prospects too, flagging the continued boost to the site from both operational and market improvements.
"At current wheat prices and with increasing production rates, this progress is expected to continue in the second half," ABF said.
The comments contrast with a statement by ABF in November that Vivergo had, in the last financial year, run up another operating loss.
Vivergo run at a £48.9m loss in 2013, accounts show.
In February last year, the group took a £98m ($147m) writedown on the value of its Vivergo stake, while BP in May pulled out of the plant – selling its stake to ABF, whose holding doubled to 94%.
Indeed, ABF has continued to stand by the long-term future of the plant, in particular seeing a boost from the onset of increased European Union mandates for blending biofuels into gasoline.
"As the percentage of ethanol inclusion in gasoline increases in line with EU mandated targets by 2020, this market is forecast to move from surplus to deficit which we expect to lead to a price increase," ABF said in November.
However, people familiar with the industry told Agrimoney.com that there appeared no sign of the rival Ensus ethanol plant, situated close to Vivergo in the north east of England, coming back on line – despite the improved market conditions.
One source told Agrimoney.com: "You have the price of the main raw material, wheat, down 20% from last year. But ethanol prices have not come nearly as far as oil, meaning margins are better.
"Ensus could be making £20,000 a day or more if it was open, in terms of its simple profits from crushing wheat into ethanol, distillers' grains and carbon dioxide.
"But the problem is that because it is such a big concern, ethanol prices would go down if Ensus were to reopen, cutting into those margins."
Another source said that it had been told by an Ensus insider "earlier this week that there was no sign of it reopening".
Agrimoney.com contacted CropEnergies, which runs Ensus, for a comment on its plans for the site, but has yet to receive a reply.
Richard Whitlock, the UK agricultural and biofuels consultant, said that ABF looked like it was now reaping the benefits of "taking a long-term view" on the ethanol sector, and of making the site "really user friendly".
He quoted innovations including longer opening hours for deliveries, pre-booking times, the potential for forward payments to suppliers, which had made VIvergo, the "ethanol plant of choice".
The fates of Ensus and Vivergo are closely watched by both grains and energy industries thanks to the scale of their output, with combined capacity to process more than 2m tonnes of wheat a year.
That is equivalent to about 13% of annual UK wheat production.
Vivergo was said by one source to be operating at "pretty close to full capacity, at what they might call commercial capacity".
London wheat futures for May closed on Tuesday at £105.15 a tonne, up £0.55 on the day, but down 14% over the past year.
By Mike Verdin