Ethanol

There are two main types of ethanol – fermentation and synthetic.

The major outlets for industrial ethanol are as a solvent and in chemical synthesis. Some 60% of US industrial demand goes to solvent applications in pharmaceuticals, toiletries and cosmetics, detergents and household cleaners, coatings and inks and processing solvents. Ethanol is also used as a chemical intermediate for the manufacture of ethyl acetate, ethyl acrylate, acetic acid, glycol ethers and ethylamines, as well as other products. It is also used as an additive to food and beverages.

However, a much larger and growing outlet for ethanol is as a fuel, oxygenate additive to gasoline and a gasoline extender. Globally, fuel ethanol accounts for 73% of production, with beverage ethanol at 17% and industrial ethanol at 10%.

Corn and sugarcane are common feedstocks for fermentation ethanol, along with grain, and sugar beet, while synthetic ethanol’s primary feedstock is ethylene. Fuel grade or bio-ethanol is produced from fermentation ethanol sources. Synthetic ethanol cannot be used for fuel ethanol purposes.

The major outlet of fuel ethanol in Europe is in ethyl tertiary butyl ether (ETBE), and also blending, whereby ethanol is used as a fuel oxygenate additive to gasoline and a gasoline extender. A number of European methyl tertiary butyl ether (MTBE) producers are in the process of switching from MTBE to ETBE and this has created new demand for fuel ethanol.

Another use is direct blending, in which ethanol is directly blended into gasoline. Both uses are set to grow following the 2003 European Union biofuels directive that traditional fuels and diesel should contain a minimum of 5.75% biofuels by 2010.

In the US, 92% of fermentation ethanol is used in fuel applications, with 4% going into food and beverages, and 4% as industrial solvents and chemicals.

In Asia, most ethanol produced and traded is fermentation ethanol. The feedstock varies from sugarcane in India, Thailand and Pakistan to corn and tapioca in China. The biggest downstream application in Asia is industrial chemicals – for production of acetic acid and ethyl acetate and also as a solvent in pharmaceuticals and personal care products. The other use is for beverage. Fuel blending use is increasing in countries like Thailand, China and India. Thailand is the leader in terms of conversion on a large scale to 10% ethanol blended gasoline. Fuel blending applications are the most important sector driving the ethanol production in Asia. Exports from Asia to Europe and the US have also spurred the fuel demand in these regions.

Ethanol was first produced thousands of years ago by fermentation of carbohydrates and in some countries large volumes are still produced by this method. Synthetic ethanol was first produced industrially in the 1930s by indirect catalytic hydration of ethylene.

Ethanol vapour irritates the eyes and respiratory tract. It may cause effects on the central nervous and on the upper respiratory tract, resulting in irritation, headache, fatigue and lack of concentration. Chronic ingestion of ethanol may cause liver cirrhosis. Vapours can travel to a source of ignition and flash back.

ICIS quotes ethanol in Europe, USA, Asia and Latin America

Frequency:

Ethanol is published weekly on Fridays in Europe and on Wednesdays in Asia and the US. Ethanol Fuel is published weekly on Wednesdays in Europe and Latin America.

Ethanol Fuel (EUROPE)

Weekly Price Assessments:

Fuel ethanol grades 99.3%-99.9%

FOB RDAM T2 (spot) (EUR/CBM with conversion to EUR/MT)

FOB RDAM T1 (spot) (USD/CBM with conversion to USD/MT)

FOB SANTOS (spot) (USD/CBM with conversion to US CTS/GAL)

Ethanol (EUROPE)

Weekly Price Assessments:

Ethanol Domestic Prices 96% Beverage Potable & Synthetic

FD UK (GBP/HLT)

FD FRANCE (EUR/HLT)

FD GERMANY (EUR/HLT)

FD ITALY (EUR/HLT)

Ethanol Domestic Prices 99% Industrial Potable & Synthetic

FD UK (GBP/MT)

FD FRANCE (EUR/HLT)

FD GERMANY (EUR/HLT)

FD ITALY (EUR/HLT)

Ethanol (Asia)

Fuel Grade- Anhydrous ethanol min 99.9%

FOB Asia (spot) (USD/tonne converted to USD/CBM)

Hydrous ethanol – min. 95%

CFR NE Asia (USD/tonne converted to USD/CBM)

CFR SE Asia (USD/tonne converted to USD/CBM)

Ethanol (USA)

Weekly Price Assessments:

Industrial Ethanol Contract Prices

DEL 200 PROOF (USD/GAL),

DEL 190 PROOF (USD/GAL)

Fuel Ethanol Spot Price

ANHYDROUS FOB US MIDWEST (PLANT) (USD/GAL)

ANHYDROUS FOB CHICAGO  (USD/GAL)

ANHYDROUS DEL SOUTHERN CAL  (USD/GAL)

ANHYDROUS FOB NY HARBOR  (USD/GAL)

Ethanol (Latin America)

Weekly Price Assessments:

Fuel Ethanol Export Prices

ANHYDROUS FOB SANTOS (USD/CBM converted to US CTS/GAL)

HYDROUS FOB SANTOS (USD/CBM converted to US CTS/GAL)

ANHYDROUS FOB SAO PAULO (BRL/CBM converted to US CTS/GAL)

HYDROUS FOB SAO PAULO (BRL/CBM converted to US CTS/GAL)

General Information:

Assessment window: Price assessments are based on information supplied by market participants through the week up to close of business on Wednesdays at 1700 hours in London for Ethanol Fuel and Houston for Ethanol Latin America, and at 1700 hours on Fridays in London for Ethanol. Price assessments for Asian ethanol are based on information received from market participants through the week up to the close of business on Wednesday at 1800 hours in Singapore.

Specifications: In Europe, ICIS quotes 99.3%-99.9% anhydrous fuel grade ethanol.

In traditional ethanol markets, European domestic assessments include quarterly and monthly contract prices for 96% grade (fermentation/potable) and 99% grade (industrial “denatured” synthetic and fermentation). In the US, quotes are given for both 200- and 190-proof specifications. The spot fuel assessment reflects 200-proof undenatured alcohol, for blending as a gasoline oxygenate.

Timing: In Europe quotes refer to cargoes loading (FOB) four weeks forward from the date of publication. In the US, industrial ethanol contract quotes refer to cargoes loading (DEL) four weeks forward from the date of publication and fuel ethanol spot quotes refer to cargoes loading 14 days forward from the date of publication. In Asia, quotes refer to cargoes within six-eight weeks delivery time from publishing date.

Terms: Credit terms are typically 20-30 days from invoicing, depending on source, otherwise 30-60 days after bill of lading date.

Standard cargo size: Standard ethanol cargo sizes are 1,000 tonnes. European prices are also quoted per hectolitre (HLT), hundred litres. Standard fuel ethanol cargo sizes are typically 1,000-3,000 cbm (cubic metres) but 500-600 cbm cargos may be included.  Typical cargo sizes in Asia vary between 1000-3000 tonnes. For hydrous ethanol, smaller cargoes of 500-900 tonnes may also be included in the assessment.

Assessment basis: European fuel ethanol price quotes are published on a free on board (FOB) Rotterdam basis for both the T1 and the T2 markets, and a FOB Santos, Brazil basis. Prices incorporate discussions and confirmed deals across the region. Prices may represent a bid/sell range in the absence of confirmed deals.

European ethanol price quotes are published on a free delivered (FD) basis, incorporating discussions and confirmed deals across the region. European domestic prices are gross prices typically defining key ethanol accounts settled on a quarterly or monthly basis.

In the US, industrial ethanol list prices, based on distiller list values, are noted as a reference for the market. Price adjustments in the industrial alcohol sector are typically made quarterly, and sellers nominating a price movement will specify whether such initiatives apply to list or contract (off-list) numbers, or both. Values range based on location and regional factors such as freight cost and gasoline blending requirements in the area.

US industrial contract prices address 190- and 200-proof for small-to-medium direct domestic buyers purchasing 50,000-375,000 gal/year.

The fuel ethanol and ethanol reports offer market commentary and analysis including details of traced spot transactions, supply/demand issues, export/import information news, spot prices, contract price negotiations and general sentiment for price direction. Where applicable there is product information, comments on upstream and downstream market developments and general market intelligence including comments on European Union and individual state legislation relating to fuel ethanol and biofuels.

Asian fuel ethanol prices are published on a FOB Asia basis. Prices incorporate discussions and confirmed deals across the region. Prices may include bid-offer range in case no confirmed deals exist.

In case of hydrous ethanol, assessments are on CFR northeast Asia and CFR southeast Asia basis. Most of the product being traded in Asia currently constitutes regional material, although the commentary includes offers or discussions about Brazilian cargoes also.

Overall, commentary also includes news on legislations regarding fuel blending, sentiment, production and seasonal factors affecting supply and demand of ethanol. When pertinent, regional comment from the US and European markets is also included in the commentary.

Brazilian prices are FOB for both domestic and export quotes. The reference city for delivery of domestic product is Ribeirao Preto, Sao Paulo. For exported ethanol, prices are assessed for product loaded on a vessel at the Santos harbour.

Prices for domestic ethanol include taxes all applicable taxes. Taxes are not levied on exported product

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