Molasses factors, soft price deplete Pakistan ethanol output

25 February 2009 08:23  [Source: ICIS news]

SINGAPORE (ICIS news)--The tight supply and high cost of the feedstock molasses and soft ethanol prices have led to the closure of several Pakistani ethanol distilleries, exporters said on Wednesday.

Of the 17 distilleries in Pakistan, 10 were currently shut, said a major ethanol producer.

Molasses, a by-product of sugarcane processing, had been in short supply after the country’s sugarcane production dropped this year, according to the producer.

Molasses prices had risen to $90/tonne (€70/tonne) ex-distillery and many producers would rather sell molasses than convert it to ethanol, prices of which had been soft, the producer added.

About 5.5kg of molasses is needed for producing 1kg of ethanol. With ethanol prices being pegged around $520-540/tonne FOB (free on board) Karachi for industrial hydrous ethanol, it did not make sense to sell ethanol, the producer said.

Another large distiller, however, added that after a bleak December and January, trading activity in ethanol had picked up with more business coming from European buyers.

For anhydrous ethanol, European buyers had paid more than $600/tonne FOB Karachi during February, according to the distiller.

Pakistan had exported around 40,000 tonnes of ethanol during the first two months of this year and remained hopeful that 2009 exports would not fall significantly from the record of nearly 350,000 tonnes during 2008, the distiller added.

($1 = €0.78)

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By: Anu Agarwal
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