US industrial ethanol producers mull price increase in Q4

02 November 2009 15:36  [Source: ICIS news]

PARIS (ICIS news)--US industrial ethanol producers will likely push for price increases during the fourth quarter to offset higher corn prices in recent months, a supplier said on Monday.

According to the source, one of the main producers last month announced a 20 cent/gal (€0.04/litre) increase for 15 November, and other suppliers were likely to follow suit.

“A second supplier is expected to announce a similar initiative for 1 December,” the source said on the sidelines of FO Licht’s World Ethanol 2009 conference in Paris.

A third producer, Grain Processing Corp (GPC), confirmed it would seek a 20 cent/gal hike, but the company said the initiative would only be effective on 1 January.

US industrial ethanol prices in October were assessed at $3.00-3.10/gal for 200-proof grade and at $2.75-2.95/gal for 190 grade, according to global chemical market intelligence service ICIS pricing.

GPC cited tight supply and upward pressure in corn as lending support to the initiatives.

Corn traded at $3.67/bushel on Monday, up from $3.33/bushel a month ago, lifted by the weaker US dollar and delays in the development of the 2009 corn crop.

On the supply side, US industrial ethanol supply has tightened since the second quarter due to production restrictions and a surge in demand for hand sanitisers.

Industrial ethanol accounts for more than 60% of the contents in hand sanitisers, the consumption of which has increased by 10 times in 2009 as a result of the swine flu pandemic.

The US has five industrial ethanol producers, but imports are also used to meet part of domestic demand.

US industrial ethanol demand is estimated at 285m-300m gal/year.

($1 = €0.68)

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By: William Lemos
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