Ethyl acetate (etac) imports from India to the European market are expected to fall in 2015, as an increase in the price of Indian feedstock ethanol and a weaker euro will make them uncompetitive, market sources said Wednesday.
India’s Cabinet Committee of Economic Affairs announced in December that ethanol prices would be fixed at a higher level in 2015 as a part of an effort to encourage domestic ethanol production and reach the country’s target of 5% ethanol content in its gasoline pool.
“The higher ethanol price in India will now make Indian etac production less competitive,” a European market source said Wednesday. “At these new ethanol prices in India, it makes more sense for them to blend it into gasoline, instead of buying acetic acid to produce etac.”
European etac is also becoming more competitive for its domestic consumers, as the EUR/USD exchange rate has shifted substantially in recent months, in favor of European production.
“The higher ethanol price in India is already affecting our margins,” a source an Indian etac producer said Wednesday. “When the ethanol fuel program started [in India] the raw material situation for ethanol changed for us.”
“We already saw a drop in imports from Europe between 2013 and 2014, and I would not be surprised if it dropped more in 2015,” the source said.
Aggregate demand for etac in Europe is estimated at 450,000 mt annually.
European production capacity amounts to 335,000 mt/year.
In 2014, European countries imported 55,000 mt of etac from India, dropping a near 40% from the 90,000 mt imported in 2013. The drop in imports between 2013 and 2014 was mainly attributed to a change in import tariffs on esters to the EU, which increased from 2.5% to 5.5% on January 1, 2014.
– Platts.com
