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By Clare Pennington Izham Ahmad Leela Landress and Steven McGinn
INSIGHT ALL EYES ON THE US AS Q3 ETHANOL SUPPLY STILL IN QUESTION
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
BY CLARE PENNINGTON IZHAM AHMAD LEELA LANDRESS AND STEVEN MCGINN AUGUST 2019
INSIGHTALL EYES ON THE US AS Q3 ETHANOL SUPPLY STILL IN QUESTION
Global ethanol markets have tightened lately Buyers in Europe Asia and the US spent much of June and early July saying so as had producers and suppliers much earlier and much louder
As the worldrsquos largest ethanol producer most of which is used for road fuel blending the US has a key part to play
Prices in Europe the US Asia and even Latin America have nearly all increased since May ndash linked to shifting supply outlooks at home and abroad
In Europe and Asia US cargoes have been hard to come by recently
This was despite growing demand in Asia where the US is a regular exporter although the country has all but lost its once largest buyer market to tariff wars - China
Europe has also seen overall fairly normal levels of US imports after antidumping duties (ADDs) on US ethanol imports to the continent were removed earlier this year
SEASON CHANGEJust when markets have tightened it looks as if they could slacken and rebalance again as a result of harvest seasons Seasonal grain and sugar beet harvests in Europe ongoing harvests in Latin America and the hazy US summer corn crop - all ethanol feedstocks - begin to coincide from late August
To what extent the market could loosen however remains unclear
With contradictory information available over US production volumes and the unpredictability of seasonal harvests supply expectations are even hazier
The US saw a high number of delivery delays to Europe due to June rains which in turn led to very limited corn availability expectations earlier in July
Over in the US government corn harvest expectations have since recovered and consumption in the fuel industry is forecast to grow year on year
0
20
40
60
80
100
31-Jul-2
019
09-Jul-2
019
18-Jun-2
019
22-May
-2019
30-Apr-2
019
03-Apr-2
019
13-Mar-2
019
19-Feb-2019
23-Jan-2
019
01-Jan-2
019
28-Nov-2
018
06-Nov-2
018
10-Oct-
2018
19-Sep-2
018
28-Aug-2
018
EUR
hl
Ethanol Anhydrous Ex-Works Sao Paulo Assessment Domehellip
Ethanol Fuel Anhydrous FOB Chicago Assessment Spot Whellip
Ethanol Hydrous Ex-Works Sao Paulo Assessment Domesthellip
Ethanol Industrial 99 FD Germany Assessment Domestic hellip
Ethanol Industrial 99 FD UK Assessment Domestic Weeklhellip
Ethanol Industrial 190 Proof FOB USG Contract Price Assehellip
Ethanol Industrial 200 Proof FOB USG Contract Price Assehellip
US AND EUROPE ETHANOL PRICES
Ethanol Anhydrous Ex-Works Sao Paulo Assessment Domestic Weekly (Mid)
Ethanol Fuel Anhydrous FOB Chicago Assessment Spot Weekly (Mid)
Ethanol Hydrous Ex-Works Sao Paulo Assessment Domestic Weekly (Mid)
Ethanol Industrial 99 FD Germany Assessment Domestic Weekly (Mid)
Ethanol Industrial 99 FD UK Assessment Domestic Weekly (Mid)
Ethanol Industrial 190 Proof FOB USG Contract Price Assessment Quarterly Contract (Mid)
Ethanol Industrial 200 Proof FOB USG Contract Price Assessment Quarterly Contract (Mid)
15K
10K
5K
0
Q1 Sep-Nov
Q2 Dec-Feb
Q3 Mar-M
ay
Q4 Jun-Aug
MY Sep-Aug
Q1 Sep-Nov
Q2 Dec-Feb
Q3 Mar-M
ay
MY Sep-Aug
MY Sep-Aug
mill
ion
bush
els
High-fructose corn syrup (HFCS) Glucose and dextrose
Starch Alcohol for fuel
Alcohol for beverages and manufacturing
Cereals and other products Seed
Total food seed and industrial use
USDA CORN EXPECTATIONSFOOD SEED AND INDUSTRIAL USE
High-fructose corn syrup (HFCS)
Alcohol for beverages and manufacturing
Starch
Seed
Glucose and dextrose
Cereals and other products
Alcohol for fuel
Total food seed and industrial use
1 September-August Latest data may be preliminary or projectedSource Calculated by USDA Economic Research Service
201718 201819 201920
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
However there has been a strong disagreement over the United States Department of Agriculture (USDA) corn outlook
When it comes to US export markets the impact of increased corn shipment expectations has been limited so far
Some Rotterdam buyers are still actively seeking for imports despite favouring volumes with higher Greenhouse Gas (GHG) savings and Asia buyers are seeing lower US import and domestic volumes available
In Europe production levels will increase in September just as demand edges down
In Brazil which vies with the US for the position of top producer by volume supply is long
Buyers there are waiting to see if prices become more competitive as the crush season there continues and supply lengthens The same goes for Brazilrsquos importers in Singapore who are finding Pakistan volumes less available this August than in previous years
At the same time legislation around the world is increasing demand and production infrastructure for fuel ethanol
A growing number of Asian countries were involved in production in 2015 than in 2010 and the same trend is ongoing today India Thailand Indonesia and China are
SPOT AND OPTIMISE OPPORTUNITIES WITH ICIS ANALYTICS
ICIS data provides independent objective and trusted intelligence for the global petrochemicals energy and fertilizer markets
Available through the iciscom subscriber platform our pricing data matched with ICIS analytics tools cover more than 180 commodities and focus on pricing trends in all major trading regions Put simply ICIS provides the information you need to make better-informed business decisions
Enquire now
1K
08K
06K
04K
02K
0
United States
Brazil
Germany
FranceChina
Argentina
Thailand
Netherlands
CanadaSpain
Indonesia
Poland
Singapore
ColombiaIndia
Thou
sand
bbl
sda
yValue
2015 GLOBAL BIOFUEL PRODUCTION TOP 15
all seeing increasing production at faster rates than their western counterparts
Governments like Indiarsquos are propelling ethanol production and demand shifting demand in US export markets Trade policy change continues to affect markets with Mercosur trade rules possibly changing the Brazil-US trade relationship
Brazilrsquos government has also introduced the Renova-Bio programme a 10-year project intended to better support the fuel ethanol industry and increase consumption in Brazil
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
Our regional market editors take an expert look at how supply has tightened on a global scale and what might happen in the coming weeks and months
BY STEVEN MCGINN
US ndash THE BIG UNKNOWN
In the US where most fuel comes from corn fuel ethanol prices have rebounded from multi-year lows Futures prices have also spiked for the third quarter
Supply expectations for coming months are lower among market participants despite a rebound in USDA corn-feedstock expectations
Production margins remain under pressure due to flooding across the Midwest leading to delayed planting
Farming and market sources expect a much shorter corn yield as a result and this has pushed feedstock costs from a bushel of corn up to three-year highs
One agricultural source with ties in the Midwest told ICIS ldquoSome corn in Nebraska didnrsquot get planted until 5 June which is really really late hellip and the corn people do have looks terriblerdquo
They quoted prices of around $4bushel for some types corn
Late planting will diminish yield per hectare dramatically according to the source while increasingly high trucking costs could limit corn deliveries
High transport costs could also see much of the harvest go to silage (fermented corn fodder markets) which is a more informal local market
Consumption of the fuel is mostly steady in the US and the
recent approval by the US EPA (Environmental Protection Agency) to allow 15 blends of the gasoline additive nationwide has boosted consumption if only slightly
There are also factors dragging down demand for US ethanol however
The US-China trade dispute has effectively cut off China as a steady destination for US producers pushing sellers to look for new markets
The loosening of Mexicorsquos energy regulations has made it a hopeful outlet but that market has yet to be deeply penetrated As we will see what happens in the US will impact other markets
BY IZHAM AHMAD
ASIA ndash ldquoALL ABOUTrdquo THE AMERICAS
The Asian market began to feel the effects of tightening supply most forcefully in June
In the southeast Asian import sector fuel ethanol prices have also been swept up in a bull run with spot import values of cargoes moving into the Philippines jumping by over $60cbm to around $560cbm CFR (cost amp freight) SE (southeast) Asia one week in June
These were the highest price levels for US fuel-grade anhydrous ethanol imports into southeast Asia since mid-December 2016
Prices have remained firm for anhydrous ethanol despite a small dip in futures the recent weeks
One Asian market player said recently that supply and
35K
30K
25K
20K
15K
10KJan Feb Mar Apr
Thou
sand
bbl
s
2018 2019
SUPPLY SO FAR IN 2019 VS 2018
2018 2019
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
demand in their region for the coming months will be ldquoall aboutrdquo pricing and expectations for US corn yields and harvest
ldquoAsian demand is not driving this market anymorerdquo they added
It is a view shared by other participants Asia relies on fuel ethanol imports from the US and Brazil as well as growing domestic production in some countries such as India
Expectations for better weather conditions in the US and its impact on corn expectations were behind the recent dip in Asia ethanol futures
However with markets in Asia still relatively tight the Asian market for hydrous ethanol which is largely supplied by Brazil and Pakistan has also been affected
ldquoWe were looking to purchase ethanol from Brazil but we could not get competitive pricesrdquo said one market source recently
Looking ahead market participants said the outlook was uncertain Spot supply from Pakistan which has two annual harvest seasons is expected to fall because the next sugar cane harvest will only resume towards the end of 2019
ldquoWe had bids at $560cbm CFR NE (northeast) Asia (for hydrous ethanol) which is where we bought last time but right now no one is willing to sell us at $560cbm anymorerdquo said another Asian market source
US regulations also impact Asian markets players have noted and some supply outlook volatility has come from mixed views on the introduction of E15 there this year
BY LEELA LANDRESS
BRAZIL ndash THE GROWING GIANT
Brazilrsquos ethanol supply is following seasonal price and supply trends for the current harvestcrush but changing trade rules could affect import patterns
The sugarcane harvest in the centre-south which accounts for 90 of Brazilrsquos ethanol output runs from April to NovemberDecember
Amid continued low sugar prices processors have been directing less output to sugar production and more towards the production of ethanol
Brazilrsquos total sugarcane processed during the current harvestcrush was 21688m tonnes at the end of July over 3 lower than the same time last year
There has been recent discussions in the Brazilian market that the agriculture ministry is considering eliminating the current tariff-free import quota on imports from the US
The current legislation allows tariff-free ethanol imports of up to 600m litresyear or 150m litres in each quarter
The resolution ends on 31 August and once the exemption expires the 20 tariff would apply to all ethanol imports from outside the Mercosur trade bloc
Mercosur includes Argentina Paraguay and Uruguay as well as Brazil
Currently the US makes up 90 of Brazilrsquos ethanol imports
300
350
400
450
500
550
600
31-Jul-2
019
10-Jul-2
019
19-Jun-2
019
29-May
-2019
08-May
-2019
17-Apr-2
019
27-Mar-2
019
06-Mar-2
019
13-Feb-2019
16-Jan-2
019
19-Dec-2
018
28-Nov-2
018
07-Nov-2
018
17-Oct-
2018
26-Sep-2
018
05-Sep-2
018
15-Aug-2
018
USDcm
bEthanol Anhydrous Min 995 Purity CFR Asia SE Spot (Mihellip
ASIA ANHYDROUS ETHANOL PRICES
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
BY CLARE PENNINGTON
EUROPE ndash LEGISLATION NOT ALWAYS KEY
Europersquos ethanol production capacities have been dwarfed by those in Asia and the US It has also been most reliant on domestic production which continues to be key in supply
However the region is set to become more integral to global markets and are starting to show signs of shifting as the US-China tariff war changes global trade patterns and a new free trade agreement with some Latin American countries hints at the regionrsquos growing primacy
Europe supply remains tight due to lower production volumes exacerbated by a lack of imports to meet the increase of peak-season demand
Brazilrsquos ethanol has historically been deemed too expensive for imports but higher prices saw shipping enquiries for cargoes in July
Despite a six-year record high prices and an open arbitrage buyers have also been unable to secure more US ethanol import volumes than usual Volumes had increased by the beginning of August however
Some buyers have gone short in June and July while others have stopped producing and buying ethanol at altogether due to feedstock shortages and six-year price highs
In September when the wheat crop is in and the sugar beet harvest is underway higher ethanol production rates are expected
Road user demand will begin easing at the same time as motorists head back from holidays and the peak driving season ends
Ensusrsquo 400000 cbmyear UK plant now partially running could step up output along with at least two other plants running at lower rates in western Europe
How much length will be added to the market is unclear and could also depend on producer run rate decisions Some may constrain output after length ran prices and margins down significantly in 2018
However with competition a key factor of increased length many large producers also keen to keep or widen their market share
Depending on US production volumes US import rates could also increase in some countries like the Netherlands the UK and Finland This will rely on GHG savings for US ethanol this year as well as supply as certified volumes must reach over 50 emissions savings
As mentioned earlier a poor corn crop could compromise US ethanol GHG savings
A newly signed deal with Mercosur countries could also see more ethanol imported from Latin America later in the year
Industrial buyers are expecting the deal to be ratified fairly quickly with unions and trade body lobbying but producers and agriculturalist could delay it
In the end Europersquos exposure to international markets is growing and supplies elsewhere could have a greater impact on balances than in recent years
BE READY TO MOVE AS FAST AS YOUR MARKETS WITH ANALYTICS TOOLS FROM ICIS
Our new analytics solutions for petrochemicals markets offer a whole-market perspective as well as robust analytics tools to examine below the surface and see the true impact of change as it happens
The combination of at-a-glance data visuals and forward thinking provides a holistic view plus the details behind it so you can optimise your trades plans and strategies
Find out more
700
600
500
400
300
200
100US Brazil India Europe
Capa
city
(litr
esy
ear)
US Brazil India Europe
GLOBAL ETHANOL PRODUCTION CAPACITIES
2018 2019
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
BY CLARE PENNINGTON IZHAM AHMAD LEELA LANDRESS AND STEVEN MCGINN AUGUST 2019
INSIGHTALL EYES ON THE US AS Q3 ETHANOL SUPPLY STILL IN QUESTION
Global ethanol markets have tightened lately Buyers in Europe Asia and the US spent much of June and early July saying so as had producers and suppliers much earlier and much louder
As the worldrsquos largest ethanol producer most of which is used for road fuel blending the US has a key part to play
Prices in Europe the US Asia and even Latin America have nearly all increased since May ndash linked to shifting supply outlooks at home and abroad
In Europe and Asia US cargoes have been hard to come by recently
This was despite growing demand in Asia where the US is a regular exporter although the country has all but lost its once largest buyer market to tariff wars - China
Europe has also seen overall fairly normal levels of US imports after antidumping duties (ADDs) on US ethanol imports to the continent were removed earlier this year
SEASON CHANGEJust when markets have tightened it looks as if they could slacken and rebalance again as a result of harvest seasons Seasonal grain and sugar beet harvests in Europe ongoing harvests in Latin America and the hazy US summer corn crop - all ethanol feedstocks - begin to coincide from late August
To what extent the market could loosen however remains unclear
With contradictory information available over US production volumes and the unpredictability of seasonal harvests supply expectations are even hazier
The US saw a high number of delivery delays to Europe due to June rains which in turn led to very limited corn availability expectations earlier in July
Over in the US government corn harvest expectations have since recovered and consumption in the fuel industry is forecast to grow year on year
0
20
40
60
80
100
31-Jul-2
019
09-Jul-2
019
18-Jun-2
019
22-May
-2019
30-Apr-2
019
03-Apr-2
019
13-Mar-2
019
19-Feb-2019
23-Jan-2
019
01-Jan-2
019
28-Nov-2
018
06-Nov-2
018
10-Oct-
2018
19-Sep-2
018
28-Aug-2
018
EUR
hl
Ethanol Anhydrous Ex-Works Sao Paulo Assessment Domehellip
Ethanol Fuel Anhydrous FOB Chicago Assessment Spot Whellip
Ethanol Hydrous Ex-Works Sao Paulo Assessment Domesthellip
Ethanol Industrial 99 FD Germany Assessment Domestic hellip
Ethanol Industrial 99 FD UK Assessment Domestic Weeklhellip
Ethanol Industrial 190 Proof FOB USG Contract Price Assehellip
Ethanol Industrial 200 Proof FOB USG Contract Price Assehellip
US AND EUROPE ETHANOL PRICES
Ethanol Anhydrous Ex-Works Sao Paulo Assessment Domestic Weekly (Mid)
Ethanol Fuel Anhydrous FOB Chicago Assessment Spot Weekly (Mid)
Ethanol Hydrous Ex-Works Sao Paulo Assessment Domestic Weekly (Mid)
Ethanol Industrial 99 FD Germany Assessment Domestic Weekly (Mid)
Ethanol Industrial 99 FD UK Assessment Domestic Weekly (Mid)
Ethanol Industrial 190 Proof FOB USG Contract Price Assessment Quarterly Contract (Mid)
Ethanol Industrial 200 Proof FOB USG Contract Price Assessment Quarterly Contract (Mid)
15K
10K
5K
0
Q1 Sep-Nov
Q2 Dec-Feb
Q3 Mar-M
ay
Q4 Jun-Aug
MY Sep-Aug
Q1 Sep-Nov
Q2 Dec-Feb
Q3 Mar-M
ay
MY Sep-Aug
MY Sep-Aug
mill
ion
bush
els
High-fructose corn syrup (HFCS) Glucose and dextrose
Starch Alcohol for fuel
Alcohol for beverages and manufacturing
Cereals and other products Seed
Total food seed and industrial use
USDA CORN EXPECTATIONSFOOD SEED AND INDUSTRIAL USE
High-fructose corn syrup (HFCS)
Alcohol for beverages and manufacturing
Starch
Seed
Glucose and dextrose
Cereals and other products
Alcohol for fuel
Total food seed and industrial use
1 September-August Latest data may be preliminary or projectedSource Calculated by USDA Economic Research Service
201718 201819 201920
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
However there has been a strong disagreement over the United States Department of Agriculture (USDA) corn outlook
When it comes to US export markets the impact of increased corn shipment expectations has been limited so far
Some Rotterdam buyers are still actively seeking for imports despite favouring volumes with higher Greenhouse Gas (GHG) savings and Asia buyers are seeing lower US import and domestic volumes available
In Europe production levels will increase in September just as demand edges down
In Brazil which vies with the US for the position of top producer by volume supply is long
Buyers there are waiting to see if prices become more competitive as the crush season there continues and supply lengthens The same goes for Brazilrsquos importers in Singapore who are finding Pakistan volumes less available this August than in previous years
At the same time legislation around the world is increasing demand and production infrastructure for fuel ethanol
A growing number of Asian countries were involved in production in 2015 than in 2010 and the same trend is ongoing today India Thailand Indonesia and China are
SPOT AND OPTIMISE OPPORTUNITIES WITH ICIS ANALYTICS
ICIS data provides independent objective and trusted intelligence for the global petrochemicals energy and fertilizer markets
Available through the iciscom subscriber platform our pricing data matched with ICIS analytics tools cover more than 180 commodities and focus on pricing trends in all major trading regions Put simply ICIS provides the information you need to make better-informed business decisions
Enquire now
1K
08K
06K
04K
02K
0
United States
Brazil
Germany
FranceChina
Argentina
Thailand
Netherlands
CanadaSpain
Indonesia
Poland
Singapore
ColombiaIndia
Thou
sand
bbl
sda
yValue
2015 GLOBAL BIOFUEL PRODUCTION TOP 15
all seeing increasing production at faster rates than their western counterparts
Governments like Indiarsquos are propelling ethanol production and demand shifting demand in US export markets Trade policy change continues to affect markets with Mercosur trade rules possibly changing the Brazil-US trade relationship
Brazilrsquos government has also introduced the Renova-Bio programme a 10-year project intended to better support the fuel ethanol industry and increase consumption in Brazil
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
Our regional market editors take an expert look at how supply has tightened on a global scale and what might happen in the coming weeks and months
BY STEVEN MCGINN
US ndash THE BIG UNKNOWN
In the US where most fuel comes from corn fuel ethanol prices have rebounded from multi-year lows Futures prices have also spiked for the third quarter
Supply expectations for coming months are lower among market participants despite a rebound in USDA corn-feedstock expectations
Production margins remain under pressure due to flooding across the Midwest leading to delayed planting
Farming and market sources expect a much shorter corn yield as a result and this has pushed feedstock costs from a bushel of corn up to three-year highs
One agricultural source with ties in the Midwest told ICIS ldquoSome corn in Nebraska didnrsquot get planted until 5 June which is really really late hellip and the corn people do have looks terriblerdquo
They quoted prices of around $4bushel for some types corn
Late planting will diminish yield per hectare dramatically according to the source while increasingly high trucking costs could limit corn deliveries
High transport costs could also see much of the harvest go to silage (fermented corn fodder markets) which is a more informal local market
Consumption of the fuel is mostly steady in the US and the
recent approval by the US EPA (Environmental Protection Agency) to allow 15 blends of the gasoline additive nationwide has boosted consumption if only slightly
There are also factors dragging down demand for US ethanol however
The US-China trade dispute has effectively cut off China as a steady destination for US producers pushing sellers to look for new markets
The loosening of Mexicorsquos energy regulations has made it a hopeful outlet but that market has yet to be deeply penetrated As we will see what happens in the US will impact other markets
BY IZHAM AHMAD
ASIA ndash ldquoALL ABOUTrdquo THE AMERICAS
The Asian market began to feel the effects of tightening supply most forcefully in June
In the southeast Asian import sector fuel ethanol prices have also been swept up in a bull run with spot import values of cargoes moving into the Philippines jumping by over $60cbm to around $560cbm CFR (cost amp freight) SE (southeast) Asia one week in June
These were the highest price levels for US fuel-grade anhydrous ethanol imports into southeast Asia since mid-December 2016
Prices have remained firm for anhydrous ethanol despite a small dip in futures the recent weeks
One Asian market player said recently that supply and
35K
30K
25K
20K
15K
10KJan Feb Mar Apr
Thou
sand
bbl
s
2018 2019
SUPPLY SO FAR IN 2019 VS 2018
2018 2019
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
demand in their region for the coming months will be ldquoall aboutrdquo pricing and expectations for US corn yields and harvest
ldquoAsian demand is not driving this market anymorerdquo they added
It is a view shared by other participants Asia relies on fuel ethanol imports from the US and Brazil as well as growing domestic production in some countries such as India
Expectations for better weather conditions in the US and its impact on corn expectations were behind the recent dip in Asia ethanol futures
However with markets in Asia still relatively tight the Asian market for hydrous ethanol which is largely supplied by Brazil and Pakistan has also been affected
ldquoWe were looking to purchase ethanol from Brazil but we could not get competitive pricesrdquo said one market source recently
Looking ahead market participants said the outlook was uncertain Spot supply from Pakistan which has two annual harvest seasons is expected to fall because the next sugar cane harvest will only resume towards the end of 2019
ldquoWe had bids at $560cbm CFR NE (northeast) Asia (for hydrous ethanol) which is where we bought last time but right now no one is willing to sell us at $560cbm anymorerdquo said another Asian market source
US regulations also impact Asian markets players have noted and some supply outlook volatility has come from mixed views on the introduction of E15 there this year
BY LEELA LANDRESS
BRAZIL ndash THE GROWING GIANT
Brazilrsquos ethanol supply is following seasonal price and supply trends for the current harvestcrush but changing trade rules could affect import patterns
The sugarcane harvest in the centre-south which accounts for 90 of Brazilrsquos ethanol output runs from April to NovemberDecember
Amid continued low sugar prices processors have been directing less output to sugar production and more towards the production of ethanol
Brazilrsquos total sugarcane processed during the current harvestcrush was 21688m tonnes at the end of July over 3 lower than the same time last year
There has been recent discussions in the Brazilian market that the agriculture ministry is considering eliminating the current tariff-free import quota on imports from the US
The current legislation allows tariff-free ethanol imports of up to 600m litresyear or 150m litres in each quarter
The resolution ends on 31 August and once the exemption expires the 20 tariff would apply to all ethanol imports from outside the Mercosur trade bloc
Mercosur includes Argentina Paraguay and Uruguay as well as Brazil
Currently the US makes up 90 of Brazilrsquos ethanol imports
300
350
400
450
500
550
600
31-Jul-2
019
10-Jul-2
019
19-Jun-2
019
29-May
-2019
08-May
-2019
17-Apr-2
019
27-Mar-2
019
06-Mar-2
019
13-Feb-2019
16-Jan-2
019
19-Dec-2
018
28-Nov-2
018
07-Nov-2
018
17-Oct-
2018
26-Sep-2
018
05-Sep-2
018
15-Aug-2
018
USDcm
bEthanol Anhydrous Min 995 Purity CFR Asia SE Spot (Mihellip
ASIA ANHYDROUS ETHANOL PRICES
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
BY CLARE PENNINGTON
EUROPE ndash LEGISLATION NOT ALWAYS KEY
Europersquos ethanol production capacities have been dwarfed by those in Asia and the US It has also been most reliant on domestic production which continues to be key in supply
However the region is set to become more integral to global markets and are starting to show signs of shifting as the US-China tariff war changes global trade patterns and a new free trade agreement with some Latin American countries hints at the regionrsquos growing primacy
Europe supply remains tight due to lower production volumes exacerbated by a lack of imports to meet the increase of peak-season demand
Brazilrsquos ethanol has historically been deemed too expensive for imports but higher prices saw shipping enquiries for cargoes in July
Despite a six-year record high prices and an open arbitrage buyers have also been unable to secure more US ethanol import volumes than usual Volumes had increased by the beginning of August however
Some buyers have gone short in June and July while others have stopped producing and buying ethanol at altogether due to feedstock shortages and six-year price highs
In September when the wheat crop is in and the sugar beet harvest is underway higher ethanol production rates are expected
Road user demand will begin easing at the same time as motorists head back from holidays and the peak driving season ends
Ensusrsquo 400000 cbmyear UK plant now partially running could step up output along with at least two other plants running at lower rates in western Europe
How much length will be added to the market is unclear and could also depend on producer run rate decisions Some may constrain output after length ran prices and margins down significantly in 2018
However with competition a key factor of increased length many large producers also keen to keep or widen their market share
Depending on US production volumes US import rates could also increase in some countries like the Netherlands the UK and Finland This will rely on GHG savings for US ethanol this year as well as supply as certified volumes must reach over 50 emissions savings
As mentioned earlier a poor corn crop could compromise US ethanol GHG savings
A newly signed deal with Mercosur countries could also see more ethanol imported from Latin America later in the year
Industrial buyers are expecting the deal to be ratified fairly quickly with unions and trade body lobbying but producers and agriculturalist could delay it
In the end Europersquos exposure to international markets is growing and supplies elsewhere could have a greater impact on balances than in recent years
BE READY TO MOVE AS FAST AS YOUR MARKETS WITH ANALYTICS TOOLS FROM ICIS
Our new analytics solutions for petrochemicals markets offer a whole-market perspective as well as robust analytics tools to examine below the surface and see the true impact of change as it happens
The combination of at-a-glance data visuals and forward thinking provides a holistic view plus the details behind it so you can optimise your trades plans and strategies
Find out more
700
600
500
400
300
200
100US Brazil India Europe
Capa
city
(litr
esy
ear)
US Brazil India Europe
GLOBAL ETHANOL PRODUCTION CAPACITIES
2018 2019
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
However there has been a strong disagreement over the United States Department of Agriculture (USDA) corn outlook
When it comes to US export markets the impact of increased corn shipment expectations has been limited so far
Some Rotterdam buyers are still actively seeking for imports despite favouring volumes with higher Greenhouse Gas (GHG) savings and Asia buyers are seeing lower US import and domestic volumes available
In Europe production levels will increase in September just as demand edges down
In Brazil which vies with the US for the position of top producer by volume supply is long
Buyers there are waiting to see if prices become more competitive as the crush season there continues and supply lengthens The same goes for Brazilrsquos importers in Singapore who are finding Pakistan volumes less available this August than in previous years
At the same time legislation around the world is increasing demand and production infrastructure for fuel ethanol
A growing number of Asian countries were involved in production in 2015 than in 2010 and the same trend is ongoing today India Thailand Indonesia and China are
SPOT AND OPTIMISE OPPORTUNITIES WITH ICIS ANALYTICS
ICIS data provides independent objective and trusted intelligence for the global petrochemicals energy and fertilizer markets
Available through the iciscom subscriber platform our pricing data matched with ICIS analytics tools cover more than 180 commodities and focus on pricing trends in all major trading regions Put simply ICIS provides the information you need to make better-informed business decisions
Enquire now
1K
08K
06K
04K
02K
0
United States
Brazil
Germany
FranceChina
Argentina
Thailand
Netherlands
CanadaSpain
Indonesia
Poland
Singapore
ColombiaIndia
Thou
sand
bbl
sda
yValue
2015 GLOBAL BIOFUEL PRODUCTION TOP 15
all seeing increasing production at faster rates than their western counterparts
Governments like Indiarsquos are propelling ethanol production and demand shifting demand in US export markets Trade policy change continues to affect markets with Mercosur trade rules possibly changing the Brazil-US trade relationship
Brazilrsquos government has also introduced the Renova-Bio programme a 10-year project intended to better support the fuel ethanol industry and increase consumption in Brazil
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
Our regional market editors take an expert look at how supply has tightened on a global scale and what might happen in the coming weeks and months
BY STEVEN MCGINN
US ndash THE BIG UNKNOWN
In the US where most fuel comes from corn fuel ethanol prices have rebounded from multi-year lows Futures prices have also spiked for the third quarter
Supply expectations for coming months are lower among market participants despite a rebound in USDA corn-feedstock expectations
Production margins remain under pressure due to flooding across the Midwest leading to delayed planting
Farming and market sources expect a much shorter corn yield as a result and this has pushed feedstock costs from a bushel of corn up to three-year highs
One agricultural source with ties in the Midwest told ICIS ldquoSome corn in Nebraska didnrsquot get planted until 5 June which is really really late hellip and the corn people do have looks terriblerdquo
They quoted prices of around $4bushel for some types corn
Late planting will diminish yield per hectare dramatically according to the source while increasingly high trucking costs could limit corn deliveries
High transport costs could also see much of the harvest go to silage (fermented corn fodder markets) which is a more informal local market
Consumption of the fuel is mostly steady in the US and the
recent approval by the US EPA (Environmental Protection Agency) to allow 15 blends of the gasoline additive nationwide has boosted consumption if only slightly
There are also factors dragging down demand for US ethanol however
The US-China trade dispute has effectively cut off China as a steady destination for US producers pushing sellers to look for new markets
The loosening of Mexicorsquos energy regulations has made it a hopeful outlet but that market has yet to be deeply penetrated As we will see what happens in the US will impact other markets
BY IZHAM AHMAD
ASIA ndash ldquoALL ABOUTrdquo THE AMERICAS
The Asian market began to feel the effects of tightening supply most forcefully in June
In the southeast Asian import sector fuel ethanol prices have also been swept up in a bull run with spot import values of cargoes moving into the Philippines jumping by over $60cbm to around $560cbm CFR (cost amp freight) SE (southeast) Asia one week in June
These were the highest price levels for US fuel-grade anhydrous ethanol imports into southeast Asia since mid-December 2016
Prices have remained firm for anhydrous ethanol despite a small dip in futures the recent weeks
One Asian market player said recently that supply and
35K
30K
25K
20K
15K
10KJan Feb Mar Apr
Thou
sand
bbl
s
2018 2019
SUPPLY SO FAR IN 2019 VS 2018
2018 2019
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
demand in their region for the coming months will be ldquoall aboutrdquo pricing and expectations for US corn yields and harvest
ldquoAsian demand is not driving this market anymorerdquo they added
It is a view shared by other participants Asia relies on fuel ethanol imports from the US and Brazil as well as growing domestic production in some countries such as India
Expectations for better weather conditions in the US and its impact on corn expectations were behind the recent dip in Asia ethanol futures
However with markets in Asia still relatively tight the Asian market for hydrous ethanol which is largely supplied by Brazil and Pakistan has also been affected
ldquoWe were looking to purchase ethanol from Brazil but we could not get competitive pricesrdquo said one market source recently
Looking ahead market participants said the outlook was uncertain Spot supply from Pakistan which has two annual harvest seasons is expected to fall because the next sugar cane harvest will only resume towards the end of 2019
ldquoWe had bids at $560cbm CFR NE (northeast) Asia (for hydrous ethanol) which is where we bought last time but right now no one is willing to sell us at $560cbm anymorerdquo said another Asian market source
US regulations also impact Asian markets players have noted and some supply outlook volatility has come from mixed views on the introduction of E15 there this year
BY LEELA LANDRESS
BRAZIL ndash THE GROWING GIANT
Brazilrsquos ethanol supply is following seasonal price and supply trends for the current harvestcrush but changing trade rules could affect import patterns
The sugarcane harvest in the centre-south which accounts for 90 of Brazilrsquos ethanol output runs from April to NovemberDecember
Amid continued low sugar prices processors have been directing less output to sugar production and more towards the production of ethanol
Brazilrsquos total sugarcane processed during the current harvestcrush was 21688m tonnes at the end of July over 3 lower than the same time last year
There has been recent discussions in the Brazilian market that the agriculture ministry is considering eliminating the current tariff-free import quota on imports from the US
The current legislation allows tariff-free ethanol imports of up to 600m litresyear or 150m litres in each quarter
The resolution ends on 31 August and once the exemption expires the 20 tariff would apply to all ethanol imports from outside the Mercosur trade bloc
Mercosur includes Argentina Paraguay and Uruguay as well as Brazil
Currently the US makes up 90 of Brazilrsquos ethanol imports
300
350
400
450
500
550
600
31-Jul-2
019
10-Jul-2
019
19-Jun-2
019
29-May
-2019
08-May
-2019
17-Apr-2
019
27-Mar-2
019
06-Mar-2
019
13-Feb-2019
16-Jan-2
019
19-Dec-2
018
28-Nov-2
018
07-Nov-2
018
17-Oct-
2018
26-Sep-2
018
05-Sep-2
018
15-Aug-2
018
USDcm
bEthanol Anhydrous Min 995 Purity CFR Asia SE Spot (Mihellip
ASIA ANHYDROUS ETHANOL PRICES
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
BY CLARE PENNINGTON
EUROPE ndash LEGISLATION NOT ALWAYS KEY
Europersquos ethanol production capacities have been dwarfed by those in Asia and the US It has also been most reliant on domestic production which continues to be key in supply
However the region is set to become more integral to global markets and are starting to show signs of shifting as the US-China tariff war changes global trade patterns and a new free trade agreement with some Latin American countries hints at the regionrsquos growing primacy
Europe supply remains tight due to lower production volumes exacerbated by a lack of imports to meet the increase of peak-season demand
Brazilrsquos ethanol has historically been deemed too expensive for imports but higher prices saw shipping enquiries for cargoes in July
Despite a six-year record high prices and an open arbitrage buyers have also been unable to secure more US ethanol import volumes than usual Volumes had increased by the beginning of August however
Some buyers have gone short in June and July while others have stopped producing and buying ethanol at altogether due to feedstock shortages and six-year price highs
In September when the wheat crop is in and the sugar beet harvest is underway higher ethanol production rates are expected
Road user demand will begin easing at the same time as motorists head back from holidays and the peak driving season ends
Ensusrsquo 400000 cbmyear UK plant now partially running could step up output along with at least two other plants running at lower rates in western Europe
How much length will be added to the market is unclear and could also depend on producer run rate decisions Some may constrain output after length ran prices and margins down significantly in 2018
However with competition a key factor of increased length many large producers also keen to keep or widen their market share
Depending on US production volumes US import rates could also increase in some countries like the Netherlands the UK and Finland This will rely on GHG savings for US ethanol this year as well as supply as certified volumes must reach over 50 emissions savings
As mentioned earlier a poor corn crop could compromise US ethanol GHG savings
A newly signed deal with Mercosur countries could also see more ethanol imported from Latin America later in the year
Industrial buyers are expecting the deal to be ratified fairly quickly with unions and trade body lobbying but producers and agriculturalist could delay it
In the end Europersquos exposure to international markets is growing and supplies elsewhere could have a greater impact on balances than in recent years
BE READY TO MOVE AS FAST AS YOUR MARKETS WITH ANALYTICS TOOLS FROM ICIS
Our new analytics solutions for petrochemicals markets offer a whole-market perspective as well as robust analytics tools to examine below the surface and see the true impact of change as it happens
The combination of at-a-glance data visuals and forward thinking provides a holistic view plus the details behind it so you can optimise your trades plans and strategies
Find out more
700
600
500
400
300
200
100US Brazil India Europe
Capa
city
(litr
esy
ear)
US Brazil India Europe
GLOBAL ETHANOL PRODUCTION CAPACITIES
2018 2019
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
Our regional market editors take an expert look at how supply has tightened on a global scale and what might happen in the coming weeks and months
BY STEVEN MCGINN
US ndash THE BIG UNKNOWN
In the US where most fuel comes from corn fuel ethanol prices have rebounded from multi-year lows Futures prices have also spiked for the third quarter
Supply expectations for coming months are lower among market participants despite a rebound in USDA corn-feedstock expectations
Production margins remain under pressure due to flooding across the Midwest leading to delayed planting
Farming and market sources expect a much shorter corn yield as a result and this has pushed feedstock costs from a bushel of corn up to three-year highs
One agricultural source with ties in the Midwest told ICIS ldquoSome corn in Nebraska didnrsquot get planted until 5 June which is really really late hellip and the corn people do have looks terriblerdquo
They quoted prices of around $4bushel for some types corn
Late planting will diminish yield per hectare dramatically according to the source while increasingly high trucking costs could limit corn deliveries
High transport costs could also see much of the harvest go to silage (fermented corn fodder markets) which is a more informal local market
Consumption of the fuel is mostly steady in the US and the
recent approval by the US EPA (Environmental Protection Agency) to allow 15 blends of the gasoline additive nationwide has boosted consumption if only slightly
There are also factors dragging down demand for US ethanol however
The US-China trade dispute has effectively cut off China as a steady destination for US producers pushing sellers to look for new markets
The loosening of Mexicorsquos energy regulations has made it a hopeful outlet but that market has yet to be deeply penetrated As we will see what happens in the US will impact other markets
BY IZHAM AHMAD
ASIA ndash ldquoALL ABOUTrdquo THE AMERICAS
The Asian market began to feel the effects of tightening supply most forcefully in June
In the southeast Asian import sector fuel ethanol prices have also been swept up in a bull run with spot import values of cargoes moving into the Philippines jumping by over $60cbm to around $560cbm CFR (cost amp freight) SE (southeast) Asia one week in June
These were the highest price levels for US fuel-grade anhydrous ethanol imports into southeast Asia since mid-December 2016
Prices have remained firm for anhydrous ethanol despite a small dip in futures the recent weeks
One Asian market player said recently that supply and
35K
30K
25K
20K
15K
10KJan Feb Mar Apr
Thou
sand
bbl
s
2018 2019
SUPPLY SO FAR IN 2019 VS 2018
2018 2019
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
demand in their region for the coming months will be ldquoall aboutrdquo pricing and expectations for US corn yields and harvest
ldquoAsian demand is not driving this market anymorerdquo they added
It is a view shared by other participants Asia relies on fuel ethanol imports from the US and Brazil as well as growing domestic production in some countries such as India
Expectations for better weather conditions in the US and its impact on corn expectations were behind the recent dip in Asia ethanol futures
However with markets in Asia still relatively tight the Asian market for hydrous ethanol which is largely supplied by Brazil and Pakistan has also been affected
ldquoWe were looking to purchase ethanol from Brazil but we could not get competitive pricesrdquo said one market source recently
Looking ahead market participants said the outlook was uncertain Spot supply from Pakistan which has two annual harvest seasons is expected to fall because the next sugar cane harvest will only resume towards the end of 2019
ldquoWe had bids at $560cbm CFR NE (northeast) Asia (for hydrous ethanol) which is where we bought last time but right now no one is willing to sell us at $560cbm anymorerdquo said another Asian market source
US regulations also impact Asian markets players have noted and some supply outlook volatility has come from mixed views on the introduction of E15 there this year
BY LEELA LANDRESS
BRAZIL ndash THE GROWING GIANT
Brazilrsquos ethanol supply is following seasonal price and supply trends for the current harvestcrush but changing trade rules could affect import patterns
The sugarcane harvest in the centre-south which accounts for 90 of Brazilrsquos ethanol output runs from April to NovemberDecember
Amid continued low sugar prices processors have been directing less output to sugar production and more towards the production of ethanol
Brazilrsquos total sugarcane processed during the current harvestcrush was 21688m tonnes at the end of July over 3 lower than the same time last year
There has been recent discussions in the Brazilian market that the agriculture ministry is considering eliminating the current tariff-free import quota on imports from the US
The current legislation allows tariff-free ethanol imports of up to 600m litresyear or 150m litres in each quarter
The resolution ends on 31 August and once the exemption expires the 20 tariff would apply to all ethanol imports from outside the Mercosur trade bloc
Mercosur includes Argentina Paraguay and Uruguay as well as Brazil
Currently the US makes up 90 of Brazilrsquos ethanol imports
300
350
400
450
500
550
600
31-Jul-2
019
10-Jul-2
019
19-Jun-2
019
29-May
-2019
08-May
-2019
17-Apr-2
019
27-Mar-2
019
06-Mar-2
019
13-Feb-2019
16-Jan-2
019
19-Dec-2
018
28-Nov-2
018
07-Nov-2
018
17-Oct-
2018
26-Sep-2
018
05-Sep-2
018
15-Aug-2
018
USDcm
bEthanol Anhydrous Min 995 Purity CFR Asia SE Spot (Mihellip
ASIA ANHYDROUS ETHANOL PRICES
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
BY CLARE PENNINGTON
EUROPE ndash LEGISLATION NOT ALWAYS KEY
Europersquos ethanol production capacities have been dwarfed by those in Asia and the US It has also been most reliant on domestic production which continues to be key in supply
However the region is set to become more integral to global markets and are starting to show signs of shifting as the US-China tariff war changes global trade patterns and a new free trade agreement with some Latin American countries hints at the regionrsquos growing primacy
Europe supply remains tight due to lower production volumes exacerbated by a lack of imports to meet the increase of peak-season demand
Brazilrsquos ethanol has historically been deemed too expensive for imports but higher prices saw shipping enquiries for cargoes in July
Despite a six-year record high prices and an open arbitrage buyers have also been unable to secure more US ethanol import volumes than usual Volumes had increased by the beginning of August however
Some buyers have gone short in June and July while others have stopped producing and buying ethanol at altogether due to feedstock shortages and six-year price highs
In September when the wheat crop is in and the sugar beet harvest is underway higher ethanol production rates are expected
Road user demand will begin easing at the same time as motorists head back from holidays and the peak driving season ends
Ensusrsquo 400000 cbmyear UK plant now partially running could step up output along with at least two other plants running at lower rates in western Europe
How much length will be added to the market is unclear and could also depend on producer run rate decisions Some may constrain output after length ran prices and margins down significantly in 2018
However with competition a key factor of increased length many large producers also keen to keep or widen their market share
Depending on US production volumes US import rates could also increase in some countries like the Netherlands the UK and Finland This will rely on GHG savings for US ethanol this year as well as supply as certified volumes must reach over 50 emissions savings
As mentioned earlier a poor corn crop could compromise US ethanol GHG savings
A newly signed deal with Mercosur countries could also see more ethanol imported from Latin America later in the year
Industrial buyers are expecting the deal to be ratified fairly quickly with unions and trade body lobbying but producers and agriculturalist could delay it
In the end Europersquos exposure to international markets is growing and supplies elsewhere could have a greater impact on balances than in recent years
BE READY TO MOVE AS FAST AS YOUR MARKETS WITH ANALYTICS TOOLS FROM ICIS
Our new analytics solutions for petrochemicals markets offer a whole-market perspective as well as robust analytics tools to examine below the surface and see the true impact of change as it happens
The combination of at-a-glance data visuals and forward thinking provides a holistic view plus the details behind it so you can optimise your trades plans and strategies
Find out more
700
600
500
400
300
200
100US Brazil India Europe
Capa
city
(litr
esy
ear)
US Brazil India Europe
GLOBAL ETHANOL PRODUCTION CAPACITIES
2018 2019
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
demand in their region for the coming months will be ldquoall aboutrdquo pricing and expectations for US corn yields and harvest
ldquoAsian demand is not driving this market anymorerdquo they added
It is a view shared by other participants Asia relies on fuel ethanol imports from the US and Brazil as well as growing domestic production in some countries such as India
Expectations for better weather conditions in the US and its impact on corn expectations were behind the recent dip in Asia ethanol futures
However with markets in Asia still relatively tight the Asian market for hydrous ethanol which is largely supplied by Brazil and Pakistan has also been affected
ldquoWe were looking to purchase ethanol from Brazil but we could not get competitive pricesrdquo said one market source recently
Looking ahead market participants said the outlook was uncertain Spot supply from Pakistan which has two annual harvest seasons is expected to fall because the next sugar cane harvest will only resume towards the end of 2019
ldquoWe had bids at $560cbm CFR NE (northeast) Asia (for hydrous ethanol) which is where we bought last time but right now no one is willing to sell us at $560cbm anymorerdquo said another Asian market source
US regulations also impact Asian markets players have noted and some supply outlook volatility has come from mixed views on the introduction of E15 there this year
BY LEELA LANDRESS
BRAZIL ndash THE GROWING GIANT
Brazilrsquos ethanol supply is following seasonal price and supply trends for the current harvestcrush but changing trade rules could affect import patterns
The sugarcane harvest in the centre-south which accounts for 90 of Brazilrsquos ethanol output runs from April to NovemberDecember
Amid continued low sugar prices processors have been directing less output to sugar production and more towards the production of ethanol
Brazilrsquos total sugarcane processed during the current harvestcrush was 21688m tonnes at the end of July over 3 lower than the same time last year
There has been recent discussions in the Brazilian market that the agriculture ministry is considering eliminating the current tariff-free import quota on imports from the US
The current legislation allows tariff-free ethanol imports of up to 600m litresyear or 150m litres in each quarter
The resolution ends on 31 August and once the exemption expires the 20 tariff would apply to all ethanol imports from outside the Mercosur trade bloc
Mercosur includes Argentina Paraguay and Uruguay as well as Brazil
Currently the US makes up 90 of Brazilrsquos ethanol imports
300
350
400
450
500
550
600
31-Jul-2
019
10-Jul-2
019
19-Jun-2
019
29-May
-2019
08-May
-2019
17-Apr-2
019
27-Mar-2
019
06-Mar-2
019
13-Feb-2019
16-Jan-2
019
19-Dec-2
018
28-Nov-2
018
07-Nov-2
018
17-Oct-
2018
26-Sep-2
018
05-Sep-2
018
15-Aug-2
018
USDcm
bEthanol Anhydrous Min 995 Purity CFR Asia SE Spot (Mihellip
ASIA ANHYDROUS ETHANOL PRICES
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
BY CLARE PENNINGTON
EUROPE ndash LEGISLATION NOT ALWAYS KEY
Europersquos ethanol production capacities have been dwarfed by those in Asia and the US It has also been most reliant on domestic production which continues to be key in supply
However the region is set to become more integral to global markets and are starting to show signs of shifting as the US-China tariff war changes global trade patterns and a new free trade agreement with some Latin American countries hints at the regionrsquos growing primacy
Europe supply remains tight due to lower production volumes exacerbated by a lack of imports to meet the increase of peak-season demand
Brazilrsquos ethanol has historically been deemed too expensive for imports but higher prices saw shipping enquiries for cargoes in July
Despite a six-year record high prices and an open arbitrage buyers have also been unable to secure more US ethanol import volumes than usual Volumes had increased by the beginning of August however
Some buyers have gone short in June and July while others have stopped producing and buying ethanol at altogether due to feedstock shortages and six-year price highs
In September when the wheat crop is in and the sugar beet harvest is underway higher ethanol production rates are expected
Road user demand will begin easing at the same time as motorists head back from holidays and the peak driving season ends
Ensusrsquo 400000 cbmyear UK plant now partially running could step up output along with at least two other plants running at lower rates in western Europe
How much length will be added to the market is unclear and could also depend on producer run rate decisions Some may constrain output after length ran prices and margins down significantly in 2018
However with competition a key factor of increased length many large producers also keen to keep or widen their market share
Depending on US production volumes US import rates could also increase in some countries like the Netherlands the UK and Finland This will rely on GHG savings for US ethanol this year as well as supply as certified volumes must reach over 50 emissions savings
As mentioned earlier a poor corn crop could compromise US ethanol GHG savings
A newly signed deal with Mercosur countries could also see more ethanol imported from Latin America later in the year
Industrial buyers are expecting the deal to be ratified fairly quickly with unions and trade body lobbying but producers and agriculturalist could delay it
In the end Europersquos exposure to international markets is growing and supplies elsewhere could have a greater impact on balances than in recent years
BE READY TO MOVE AS FAST AS YOUR MARKETS WITH ANALYTICS TOOLS FROM ICIS
Our new analytics solutions for petrochemicals markets offer a whole-market perspective as well as robust analytics tools to examine below the surface and see the true impact of change as it happens
The combination of at-a-glance data visuals and forward thinking provides a holistic view plus the details behind it so you can optimise your trades plans and strategies
Find out more
700
600
500
400
300
200
100US Brazil India Europe
Capa
city
(litr
esy
ear)
US Brazil India Europe
GLOBAL ETHANOL PRODUCTION CAPACITIES
2018 2019
Copyright 2019 Reed Business Information Ltd ICIS is a member of RBI and is part of RELX Group plc ICIS accepts no liability for commercial decisions based on this content
BY CLARE PENNINGTON
EUROPE ndash LEGISLATION NOT ALWAYS KEY
Europersquos ethanol production capacities have been dwarfed by those in Asia and the US It has also been most reliant on domestic production which continues to be key in supply
However the region is set to become more integral to global markets and are starting to show signs of shifting as the US-China tariff war changes global trade patterns and a new free trade agreement with some Latin American countries hints at the regionrsquos growing primacy
Europe supply remains tight due to lower production volumes exacerbated by a lack of imports to meet the increase of peak-season demand
Brazilrsquos ethanol has historically been deemed too expensive for imports but higher prices saw shipping enquiries for cargoes in July
Despite a six-year record high prices and an open arbitrage buyers have also been unable to secure more US ethanol import volumes than usual Volumes had increased by the beginning of August however
Some buyers have gone short in June and July while others have stopped producing and buying ethanol at altogether due to feedstock shortages and six-year price highs
In September when the wheat crop is in and the sugar beet harvest is underway higher ethanol production rates are expected
Road user demand will begin easing at the same time as motorists head back from holidays and the peak driving season ends
Ensusrsquo 400000 cbmyear UK plant now partially running could step up output along with at least two other plants running at lower rates in western Europe
How much length will be added to the market is unclear and could also depend on producer run rate decisions Some may constrain output after length ran prices and margins down significantly in 2018
However with competition a key factor of increased length many large producers also keen to keep or widen their market share
Depending on US production volumes US import rates could also increase in some countries like the Netherlands the UK and Finland This will rely on GHG savings for US ethanol this year as well as supply as certified volumes must reach over 50 emissions savings
As mentioned earlier a poor corn crop could compromise US ethanol GHG savings
A newly signed deal with Mercosur countries could also see more ethanol imported from Latin America later in the year
Industrial buyers are expecting the deal to be ratified fairly quickly with unions and trade body lobbying but producers and agriculturalist could delay it
In the end Europersquos exposure to international markets is growing and supplies elsewhere could have a greater impact on balances than in recent years
BE READY TO MOVE AS FAST AS YOUR MARKETS WITH ANALYTICS TOOLS FROM ICIS
Our new analytics solutions for petrochemicals markets offer a whole-market perspective as well as robust analytics tools to examine below the surface and see the true impact of change as it happens
The combination of at-a-glance data visuals and forward thinking provides a holistic view plus the details behind it so you can optimise your trades plans and strategies
Find out more
700
600
500
400
300
200
100US Brazil India Europe
Capa
city
(litr
esy
ear)
US Brazil India Europe
GLOBAL ETHANOL PRODUCTION CAPACITIES
2018 2019
