India’s Somaiya may cut etac output on ethanol shortage

30 August 2012 09:04  [Source: ICIS news]

MELBOURNE (ICIS)--India’s Somaiya Group may reduce the operating rate at its two ethyl acetate (etac) plants in Maharashtra if supply of feedstock ethanol continues to be tight, a company source said on Thursday.

It has been difficult to procure sufficient ethanol to run its etac plants, and Somaiya will make a decision to adjust its output level in the coming weeks, should ethanol availability remain limited, the source added.

The company’s 30,000 tonne/year unit at Mahad and 100,000 tonne/year plant at Sakarwadi are running at full rates currently, the source said.

Ethanol, typically made from sugar molasses in India, is used in combination with acetic acid in etac production.

Several Indian etac makers said that they expect to see a further increase in the cost of ethanol in September, following a 10-15% hike this month.

Domestic ethanol prices in India rose to Indian rupees (Rs) 33-34/litre ($0.59-0.61/litre) in August, from Rs29-30/litre in July, the producers said.

Mounting ethanol costs prompted producers to implement a price increase of Rs2-3/kg for domestic etac to Rs53-55/kg EXW (ex-works) for August.

Below-average rainfall during this year’s monsoon has partly caused a hike in sugar and therefore ethanol prices. Lower distillery operating rates during the annual monsoon season have contributed to curb the supply of ethanol.

However, the ethanol supply tightness may not ease substantially with crushing and production resuming in October/November, because the likelihood of a poor harvest has prompted ethanol suppliers to limit their sales volumes, a producer added.

India is the world’s second-largest producer of sugar cane.

Other etac manufacturers in India include Jubilant Life Sciences, Laxmi Organic Industries and Dhampur Alco-Chem.

($1 = Rs55.68)

By: Trisha Huang

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