As the Platts T2 ethanol assessment hit a 15 day high of Eur450/cu m on Wednesday evening, there was an element of cautious optimism taken by traders that prices might slowly start to return to their pre-March levels.
"Producers are offering spot, consumers eating through inventories, that will probably increase in pace due to better blending incentives versus other fuels and versus Q1 economics. People will try to keep inventories full, that will create demand and there is maintenance going on, so we will start hunting for a floor here and then we can think of a slow return to higher numbers", one source said.
Although prices have increased every day since the beginning of April, the market remains in contango as demand focuses away from prompt dates and the cash market was at a Platts all-time low discount against the front-month paper swap of Eur26/cu m.
With the contango on the paper market through to June, driving season demand had not taken hold just yet. "Think April can remain weak", the source said. A second source added that the structure in the market was seeing demand focused on back-end dates, "not seeing much interest for physical on prompt, I think May you'll see slightly better demand".
