28 March 2011 04:13 [Source: ICIS news]
SAN ANTONIO, Texas (ICIS)--US industrial ethanol contracts were poised to rise sharply as the International Petrochemical Conference (IPC) got underway on Sunday in San Antonio.
The expected increase stems from gains in the price of corn, which is the main feedstock for the US biofuel.
US corn prices began to climb steadily in November 2010 before surging in January on news that the US Department of Agriculture (USDA) had reduced its crop production estimates for 2011.
Corn futures traded this week at around $6.80/bushel (€4.83/bushel), down from $7.40/bushel early in March, but up from $6.00/bushel in the first week of the year.
US industrial ethanol producers nominated contract increases of 40 cents/gal for April, following increases implemented in the two previous quarters, also on the back of higher corn prices.
The market is likely to take most of the increase in April, a buyer said, citing sustained upward pressure from the feedstock.
US industrial ethanol contracts, which usually move on a quarterly basis, in January were assessed at $3.50-3.65/gal DEL (delivered) for 200-proof grade and at $3.25-3.50/gal for 190 grade.
The expected increase in April will follow a 30 cent/gal jump in January and a 10-15 cent/gal increase in October 2010.
Industrial ethanol is used downstream in the chemical intermediates and personal care segments, which together account for around 50% of the market.
Other downstream segments include coatings, inks and adhesives, cleaning products and the vinegar sector.
Sponsored by the National Petrochemical & Refiners Association (NPRA), the IPC runs through Tuesday.
($1 = €0.71)
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