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 Q4 2014
European ethanol producers have said they are not open to price decreases during the fourth quarter. Producers expect contract values to stabilise at worst amid recent price rises for fuel ethanol, temporarily lower operating rates in the 99% industrial-grade ethanol market and the peak winter demand season for 96% beverage-grade ethanol.
US industrial ethanol contracts for the fourth quarter have been rolled over, as cheap feedstock corn prices have kept margins healthy. Supplies remain tight as demand for industrial and beverage grades is strong, according to sources. Meanwhile, fuel ethanol spot prices have fallen to four-year lows, because of tremendous pressure from weak gasoline demand and cheap corn prices.
Limited supply could push the price of hydrous ethanol prices in Asia up in the fourth quarter. Supply from Brazil is expected to decline, because of the conclusion of the sugarcane harvest and crushing season. Market participants also expect supply from Pakistan to be limited in view of the destruction on sugarcane crops from the recent flooding. Asian anhydrous ethanol prices are expected to come under pressure as supply in the fourth quarter is likely to outstrip demand. Near-perfect US weather has ensured the flourish of corn crops, resulting in a bumper harvest. The subsequent plummet of corn prices has enticed ethanol producers to increase output due to lower feedstock costs. However, demand from the Philippines will remain sluggish, as local production has increased following two new plant start-ups and higher operating output at existing plants.
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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.