Ethanol: Spot nears 1-month low on heavy stocks, weaker natgas

Quantum Commodity Intelligence - Spot T2 ethanol barges traded in ARA tumbled to their lowest in nearly a month by the Tuesday London close, pressured by weaker TTF gas futures and market talk of heavy stock levels in the port complex.

After a front-end (Sept 9-13) bid was hit at €1,085/cu m, buyers vanished, forcing sellers to lower their offers during the rest of the MOC window.

The mid-window (Sept 13-17) was last offered at €1,038/cu m, while a back-end barge (Sept 17-21) was offered down to €1,039/cu m.

That left the spot at €1,037/cu m, down €73.50/cu m on the day – its sharpest day-on-day fall since December last year.

The sharp drop left many market participants puzzled, with some sources saying a shortage of storage availability in ARA has put pressure on the spot market.

TTF natural gas futures corrected lower from Monday's peak, with October trading down 3% to €238.6/MWh, giving some downwards pressure to the market.

However, TTF futures remain over 11% up from last Friday's settle, with ethanol production margins remaining well in the red, leaving many wondering how ethanol producers will be able to survive Europe's energy crisis.

The moves down the curve were even sharper, with October valued a steep €120/cu m lower on the day at €950/cu m, basis a spread trade to November at -€30/cu m, slightly wider on the day.

Q4 swaps traded at €1,000/cu m, down €85/cu m, while Q1 was down €95.25/cu m to €1,026.75/cu m.