US ethanol outlook up as margins return - Iowa group - VIDEO

16 February 2010 20:57  [Source: ICIS news]

ORLANDO, Florida (ICIS news)--Sentiment in the US ethanol industry has taken a turn for the better in 2010, an ethanol group said on Tuesday, attributing the improvement to renewed profitability in the sector.

“I don't think it is any big secret. There is some margin in ethanol production this year...last year there was no margin,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association (IRFA), which represents producers in one of the key US corn-growing states.

“People feel we've got our spring back in our step,” Shaw said on the sidelines of the National Ethanol Conference in Orlando (see video below).

The US ethanol industry went through a tough time in 2009, as a drop in gasoline prices pressured margins and the global financial crisis left the industry scrambling to find credit.

Credit woes and operating losses caused some US producers to shut down production, while several others were forced into bankruptcy.

Although there is a brighter outlook this year, Shaw said the ethanol sector faces a number of challenges in 2010. In particular, the industry needs to get Congress to renew the ethanol blender credit, which is de to expire at the end of the year.

“Extending the credit will be key to keep this industry going,” he said.

The official said the US industry also needs a positive response from the Environmental Protection Agency (EPA) on efforts to push through higher blends of gasoline above the current 10% for ordinary cars, with a 15% mix known as E15 as the goal.

Ethanol makers claim E15 is safe for existing vehicles, but critics of the biofuel as well as vehicle makers warn that higher blends could damage engines.

The EPA is testing E15 and is expected to make an announcement by mid-2010, but Shaw said he does not believe a decision on the higher blend will come out until the end of the year.

An EPA representative who spoke at the conference declined to comment on a timetable, citing policy.

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By: William Lemos
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