(Corrects to show Brazilian export data in last paragraph is to all destinations)
* Ethanol consumption slumped globally due to COVID-19 crisis
* EU makers fear cheap imports when demand resumes
* Called the European Commission for action, possibly tariffs
* U.S., Brazilian ethanol exports surged in past months
By Sybille de La Hamaide
PARIS, May 6 (Reuters) - An influx of cheap U.S. and Brazilian ethanol threatens Europe’s producers as businesses resume operations, companies have told the European Commission, urging it to act to protect an industry reeling from depressed demand.
Sharp falls in driving and air travel due to the coronavirus pandemic have hit the biofuel sector worldwide, forcing companies to dtastically cut output and prices, notably in top producers the United States and Brazil.
The two countries account for about 55% and 30% of the world’s ethanol production respectively.
European producers of ethanol, made from grains or sugar crops, now fear that record stocks in these countries could prompt them to further boost their shipments to Europe when confinement measures are lifted.
They asked the European Commission for quick action, including potential tariffs.
“The threat of injury is blatant,” EU ethanol makers’ lobby ePure said in a letter to the EU executive. “Record high stocks could flood at low prices an already depressed European market.”
The EU could raise tariffs on ethanol fuel temporarily to allow the industry to recover without being pressured by cheap imports, Sylvain Demoures, head of French ethanol makers lobby SNPAA, suggested.
The French government is preparing a formal request to the EU, the environment minister said last week without giving details. France is the EU’s top fuel ethanol maker.
“We need to be vigilant,” Alain Commissaire, Chief Executive of French sugar and ethanol maker Cristal Union, told Reuters. “U.S. producers can put in place systems that would destroy us in 12 months.”
Cristal Union had to cut ethanol production by more than 80% since the start of the crisis, he said.
This was only partly compensated by a rise in the production of hand sanitizers to fight COVID-19, an initiative taken by other European producers including French competitor Tereos, Germany’s Verbio and Britain’s Ineos.
U.S. ethanol had been effectively banned from the European market between 2013 and 2019 by anti-dumping duties, but the European Commission repealed these duties in May last year, saying that a recurrence of dumping was unlikely.
Imports of U.S. ethanol jumped in 2019 with 3.85 million hectolitres imported, up from 1.15 million in 2018, Eurostat data showed. Preliminary data emerging from 2020 show that the trend has continued in the first months of the year, ePure said.
Still, U.S. analysts and traders were cautious about the forecast of a surge in exports.
“We all expect exports to be less than last year. That’s a reasonable assumption based on less driving demand around the world,” said Craig Willis, senior vice president of global markets at Growth Energy, a U.S. biofuel trade group.
Brazilian ethanol would benefit from the sharp devaluation of the Brazilian real, which is trading near an all-time low against the dollar.
It makes exports particularly attractive for Brazilian mills at a time when local demand is down around 40%, Matheus Sleiman da Costa, a Sao Paulo-based sugar and ethanol analyst at INTL FCStone, said.
Brazilian customs data released on Monday showed that exports of alcohol, a category where ethanol makes up the bulk of volumes, nearly trebled in April at 134.3 million litres, from only 46.1 million litres a year earlier. (Reporting by Sybille de La Hamaide, additional reporting by Stephanie Kelly and Marcelo Teixeira in New York, Michael Hogan in Hamburg, Nigel Hunt in London; Editing by Emelia Sithole-Matarise)