Ethanol orders unchanged despite price fall

The Phnom Penh Post
http://www.phnompenhpost.com/

Written by Nguon Sovan
Tuesday, 02 June 2009

Cambodia’s first bio-ethanol factory in Kandal province says it has not benefitted from low costs as sales remain flat

THE recent decline in ethanol prices has not resulted in an increase in orders placed with Cambodia's first bio-ethanol plant, which opened in November, the head of the Korean company that operates the facility told the Post Monday.

Lee Dong Jun, Cambodia director of MH Bio-Energy Group, said ethanol prices had dropped from US$700 per tonne in November to $600 per tonne in May, but that the plant's export volume had not been affected.

"So far we have exported 20,000 tonnes of bio-ethanol fuel to European markets, and we expect to export an additional 20,000 tonnes by the end of the year," he said.

Ith Praing, secretary of state at the Ministry of Industry, Mines and Energy, said Monday that the decline in ethanol prices could be attributed to the decline in the price of oil on international markets, which fell markedly after reaching record highs last summer before falling steadily ahead of a recent rally - oil prices increased by nearly 30 percent last month.

Ith Praing argued that the fall in oil prices had hit other fuels.

"Bio-ethanol is a kind of renewable energy, an environmentally friendly alternative to gasoline, so bio-ethanol and oils are linked," he said. "So when the oil price goes up, the price of bio-ethanol also goes up, and when oil prices go down, bio-ethanol also goes down in price."

Sar Peov, head of the administration unit at the factory, which is located in Kandal province, said the price of cassava had begun to recover slightly with the concurrent increase in the price of oil, though he could not provide figures supporting this claim.

Lee Dong Jun said the decline in the price of ethanol since November had also coincided with the decline in the price of dry cassava chips, a raw material used in ethanol production, meaning that the company had not experienced much change in revenue.

Cassava prices had also become depressed due to a Thai blockade on Cambodian exports designed to protect prices across the border. Sources in Pailin have recently told the Post that cassava is now getting through to Thailand.

"Now it is roughly $110 or $112 for a tonne of dry chips of cassava, which is down from between $130 to $180 per tonne last year," he said.

He added that the plant requires 100,000 tonnes of dry cassava chips per year, which it receives mainly from Battambang, Banteay Meanchey and Kampong Cham provinces.

Lee Dong Jun expressed optimism regarding the plant's prospects, saying he expected international demand for ethanol to increase, which would lead to an increase in the amount of cassava the plant would need to operate.

"We will need more when we increase our production volume," he said.