Author: Mark Henwood
Emerging Markets and EAFA fell, S&P500 traded even this week. With the exception of Fuel Cells, all Camino’s PurePlay Indices followed the international markets downward.
Fuel Cells came off their 52 week low with a 1.9% increase driven by big increases in two stocks. Ceres Power (CWR.L) rose 37.4%. After checking the news and discussing the increase with our advisors, we can’t explain the sharp increase on Friday. Maybe we’ll learn next week what drove the trading starting at about 10:15 AM Friday. ITM Power (ITM.L) also rose an impressive 32.5% after one of the analysts covering the stock reiterated their buy rating (whileincreasing their estimated losses for the company). While the company has GBP 25 million in cash providng some breathing room, I’ve commented previously that the company’s short range PEM fuel cell car doesn’t seem compelling.
Biofuel was the real story this week falling 6.9% with two of the US based ethanol producers suffering big decreases. Biofuel (BIOF) was off 34.2% and Pacific Ethanol (PEIX) was off 26.4%. Driving these and other declines was a continued deterioration in the basic economics of US corn based ethanol production. With September corn closing on the CBOT at USD 7.456/bushel and December ethanol closing at USD 2.78/gallon the “corn crush” margin has fallen to a slim USD 0.2/gallon. Other revenues from selling feed and subsidies just don’t provide enough margin.
Last week I commented that with more capacity coming on line it was hard to see how economics for ethanol producers was going to improve. With concerns about the corn supply being affected by mid-west flooding, apparently some of the producers have reached similar conclusions and Citi reported on Friday that 5 small to mid-sized plants have been shut-in. With new plants scheduled I’m looking for more similar announcements particularly involving less efficient plants. So even in the one sustainable sector whose product directly benefits from high petroleum prices the companies are down 36.9% for the year.
LED-Lighting continued its sharp sell-off dropping 9.5% for the week. Arima (6289.TW), Neo-Neon (1868.HK), and Zhgiang Yankon (600261.SS) were all down over 15% for the week and are at their 52 week lows. While this is certainly a very promising area with the potential for game changing breakthroughs, investors are not currently being rewarded for future potential.
Mark is the founder of Camino Energy, an information provider specializing in globally traded sustainable energy stocks. He also is an investor in sustainable energy stocks and has positions in Renewable Electricity.