Ethanol Prices, markets & analysis
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Ethanol overview Transcript
The European ethanol market is a traditional one, and it covers the two main grades the 99% industrial, which is both synthetic and fermented and the 96% neutral beverage grade which is mainly based on molasses.
The market is generally quarterly based but there is also an element of monthly distribution and spot business. There are also some longer term contracts and they’re typically for the larger volume customers.
There’s also a 96% rectified neutral grade (REN) market which is a seasonal one and typically goes into the screen wash sector.
Other downstream sectors include industrial applications, cosmetic and pharmaceutical and also different beverage beverages as well.
The overall pricing trend has been firm particularly in the second half of this year, and this is due to: globally poor harvests; a resulting lack of imports; synthetic production problems and robust demand.
The future outlooks also set to be firm and increasing. This is due to the next harvest availability, due mid next year in Europe and also the renewable energy directive in Europe which is set to boost biofuel consumption by 10% by 2020. So this will have an additional burden on the traditional ethanol market.
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Ethanol: Market overview
Updated to Q3 2015
Brazilian ethanol prices are expected to decline steadily over the course of the third quarter as the 2015/2016 harvest and crush season progresses after starting in April. Supply generally lengthens until the end of the season in November/December.
With Brazil being the main supplier of hydrous/B-grade ethanol to northeast Asia, market players in the region also expect supply to be long for the third and fourth quarters of this year.
Sources said customers had covered their requirements for the rest of the year. Some industry players added depending on the price direction, customers may absorb some extra volumes, which they would usually buy for the first quarter of 2016.
The two-year decline in European prices for industrial and beverage grade ethanol quarterly contracts reversed in the third quarter of 2015, after a second quarter of predominantly rollovers. Some believe tight European supply in the 99% industrial ethanol sector will continue until August and beyond. The 96% beverage grade ethanol market has an eye on the next harvest for a clue as to how balanced supply will be, as it teeters on the brink of tightness. Currently low imports are not expected to rise significantly.
US fuel ethanol spot prices will gain strength as gasoline demand remains strong during the summer driving season. Industrial ethanol contract prices were pressured by steady demand and tight supplies. Exports helped to support the market.
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Ethanol news & analysis
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Ethanol is a colourless, flammable volatile liquid, with characteristic odour and burning taste. It is miscible with water, ether, acetone, benzene and a wide range of organic products. Ethanol vapour mixes well with air, and explosive mixtures are easily formed.
The two major outlets for industrial ethanol are as a solvent and in chemical synthesis.
Ethanol is 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.
A large outlet for ethanol is as a fuel, oxygenate additive to gasoline and a gasoline extender.
In addition, ethanol can be used in perfume due to its light odour and quick evaporation.