CropEnergies said it would take a "sustained improvement" in European ethanol dynamics to allow a reopening of its UK-based Ensus plant - even as the biofuels group downplayed prospects of a market revival.
The German-based group, which in February closed Ensus thanks to the low margins of producing ethanol from grain, said that the financial case for reopening the site, in north east England, remained poor.
"The current price level does not allow us to operate the plant on a cost-covering basis," CropEnergies said in a letter signed by Joachim Lutz, now the group's chief executive.
Nor did the group signal hopes of an imminent reopening of the site, saying that "if there is a sustained improvement in the market situation, we will resume operation of the plant" but flagging doubts over such an upturn.
CropEnergies – terming 2014-15 the "most difficult financial year in the history" of the company, as European fuel-grade ethanol prices plumbed new lows – said that "for the moment, we do not expect to see any significant change in market conditions in the 2015-16 financial year".
Indeed, the company, unveiling an operating loss of E11m for the 2014-15 financial year, which ended in February, said it "cannot rule out the possibility of another operating loss" in the current year.
CropEnergies forecast that its operating loss for 2015-16 will come in between a loss of potentially E20m and a profit of E10m, on revenues seen falling by around a quarter to a E625m-675m.
These estimates do not include the loss of "up to E15m annually" resulting from the closure of the Ensus plant, which is one of the largest bioethanol sites in Europe, with the capacity to produce 400,000 cubic metres of ethanol from wheat.
That equates to about 8% of the EU's total demand.
For the UK, the site represents a large potential source of wheat consumption, with capacity to take more than 1m tonnes a year, although the site's troubled history has limited its demand for the grain.
Furthermore, the plant which - opened in 2009, and was bought by CropEnergies in 2013, after a series of shutdowns – has often turned to alternative grains such as corn and barley as feedstocks, when incentivised by price differentials.
CropEnergies said its downbeat forecast for ethanol markets this year is "based on the fact that actual bioethanol demand continues to be significantly below the forecasts contained in EU member states' national action plans".
EU fuel ethanol consumption in 2015 is expected to decline by 3.7% to 5.1m cubic metres, due to a lack of government support for increased blending of ethanol into gasoline.
"A significant expansion in the use of renewable energies in the fuel sector requires the introduction of E10 across Europe, which is expected to take place in the medium term following the conclusion of discussions about the future form of the political framework in the EU", said CropEnergies.
E10 is a blend of 10% ethanol in gasoline. The product would replace E5, 5% ethanol in gasoline, but has met some resistance due to consumer suspicion, as well as uncertainty about the real environmental benefits of crop biofuels.
The EU is currently in the process of expanding the obligation to blend biofuels into transport fuel, but the decision is unlikely to be finalised until the end of the year.
"In view of this lead time, market observers do not expect to see a significant increase in the blending obligations for bioethanol in 2015."
CropEnergies held out longer-term hope for the industry, assuming the increased mandates are pushed through.
"CropEnergies still expects the EU's decision, taken in April, in favour of increasing the proportion of renewable energies in the transport sector to give positive momentum to the European bioethanol market," said the group.
"In particular, increasing the blending rates should result in E10 being introduced in further member states. This would also improve the revenue and earnings situation for bioethanol producers in Europe again."
In the year to February 2014 CropEnergies saw revenues rise by 6% to Eur837m.
However, falling energy prices, and the closure of the group's largest ethanol plant, based in Wilton, pushed the group into a net a net loss of Eur58m, from a profit of Eur12m in 2013-14.
CropEnergies shares stood 0.1% higher at E2.977 in afternoon deals in Frankfurt.
By William Clarke