Ekofuel prices have experienced a significant decline over the past few months, reaching their lowest point since June 2022. In the wake of Russia's invasion of Ukraine during the summer of 2022, there was a sudden surge in the global price of bioethanol. This, combined with substantial increases in natural gas and electricity prices, led to a sharp rise in demand for bioethanol fuel products, consequently driving prices higher.
The Impact of the UK Energy Price Guarantee
The UK government introduced an energy price guarantee in September 2022, which brought a sense of calm to the bio ethanol fuel market following an extraordinary surge in sales in August 2022. Despite the energy price guarantee, sales of bio ethanol fuel for fires remained high throughout the autumn and winter of 2022. Concerned by potential fuel shortages and electricity blackouts, consumers stockpiled physical fuels, including logs and bio ethanol liquid fuel.
Shortages and High Prices affect the Market
The sudden surge in demand for bioethanol fuels left many retailers struggling to meet the demand and experiencing shortages of stock. These sporadic bioethanol fuel shortages, along with persistently high prices, continued during the first few months of 2023. However, now that we have left the winter of 2022 behind, we can observe a downward trend in bioethanol fuel prices.
Uncertainty Looms for Winter 2023 Prices
The question that arises is whether these lower prices will hold during the winter of 2023. The honest answer is that no one can know for certain at this stage. Various factors come into play, such as the summer harvest, the war in Ukraine, the exchange rate between the pound and the euro, oil and natural gas prices, inflation rates, interest rates, and product demand.
Growing Demand for Sustainable Heating Fuel
Undoubtedly, there is an annual increase in the demand for bio ethanol fuel for fires. Bio ethanol fuel is considered a sustainable heating fuel, aligning with the 2050 Net Zero agenda. During the summer, the demand for bio ethanol fuel for fires is typically low, resulting in production facilities often operating below capacity and, as a result, selling bio ethanol fuels at lower prices. However, as we approach autumn and winter, the demand for bio ethanol fuels quickly escalates, and production facilities rapidly reach full capacity. This surge in winter demand, coupled with unexpected increases in demand, as witnessed in 2022, can lead to sudden price hikes.
Managing Price Volatility: Advice for Consumers and Trade Customers
Given the unpredictable nature of bioethanol fuel prices for the winter of 2023, our advice to domestic customers is to buy bioethanol fuel at a price that you are comfortable with. This may entail purchasing some bioethanol fuel during the summer months to be used in the winter. Similarly, trade customers seeking pallet loads should consider the same approach, ensuring that they have stock to fall back on in the event of an unforeseen demand increase.