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E70 doubts mount in EU ethanol market

17 May 2012, 3.43 pm GMT

London, 17 May (Argus) — European ethanol traders have expressed widespread doubt as to whether imported blends of ethanol containing more than 30pc denaturant can escape changes to the EU's tariff classification codes, which impose a full agricultural duty of €102/m³ ($134/m³) on all ethyl alcohol imports classified as “denatured”.

The EU published regulation 211/2012 in its official journal in mid-March, specifying that imported blends containing 70pc ethyl alcohol and 30pc gasoline should be treated as denatured ethanol rather than a chemical compound, quashing the 6.5pc import duty previously enjoyed by imported blends such as US-sourced E90 under a non-agricultural EU customs code classification.

Some traders had previously suggested that imported blends of less than 70pc ethyl alcohol blended with potential additives such as naphtha, MTBE or ETBE fell outside the rules imposed by the latest amendments to the tariff classification codes. Dealers had also claimed that these imported blends could potentially replace up to 50pc of Europe's shrinking E90 market. But these expectations have faded as further detail of the workings of Europe's customs authorities have come to light.

Recently obtained documents from the European Commission summarising several meetings of the commision's Customs Code committee dating from October 2011 through to March 2012 indicate that all imported ethanol/gasoline blends containing more than 50pc ethanol should be treated as “denatured ethyl alcohol” and subject to the same tariff duties as blends with a higher ethyl alcohol content such as E90.

The documents provide a specific statement from the committee chair that even those mixtures containing 51pc ethyl alcohol and 49pc petroleum are to be classified as “denatured” under classification rules.

The classification of mixtures of ethyl alcohol and ETBE and other denaturants including MTBE, tertiary butyl alcohol, isobutanol and isopropanol are also addressed with the chair reportedly stating that “all mixtures with a high content in ethyl alcohol and any or all of these denaturants” should be classified as denatured ethyl alcohol. The committee is planning at a later date to issue a full list of denaturants that attract the €102/m³ import duty.

The new context provided by the summaries essentially rules out the viability of imported ethanol/gasoline blends such as E70 on the European market. E70 blends had failed to attract interest prior to the disclosure with offers for the product going uncountered amid questions regarding its financial viability, and anecdotal reports that EU customs officials were refusing to treat such blends under the terms of existing import duty arrangements.

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