ICIS' coverage of the Ethanol market is published weekly in Asia, Europe, Latin America. Price assessments cover anhydrous and hydrous grades in some regions, beverage and industrial grades in others.
Our market intelligence gathered by our locally based experts gives unbiased and independent commentary to support you making key commercial choices. In addition, there is Fuel Ethanol coverage in Europe giving weekly prices, news and analysis.
Our editor gives their expert view
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 2016
Asia’s demand for US-origin fuel-grade ethanol imports in Q4 is forecast to remain strong as regional production remains insufficient to meet fuel blending mandates, though prices may be capped by an expected strong corn harvest in the US.
Demand for hydrous beverage-grade or industrial-grade ethanol imports, mostly bound for Japan or Korea, is expected to be stable despite slower exports from Brazil as buyers turn to alternative sources of cargoes, such as Pakistan or southeast Asia.
Europe spot pricing for fuel ethanol was unpredictable into the fourth quarter of 2016 after a volatile, hard-to-read summer. The region’s self-sufficiency continued, isolated from imports by low prices and trade barriers.
Prices were recovering from an unexpected one-year low at the end of September. The restart at the end of Q3 of a large ‘swing’ producer at Rotterdam, now owned by Belgium’s Alcogroup, was expected to be a key factor in Q4, coinciding with the ramp up of CropEnergies’ Ensus plant in the UK. The end of the summer driving season usually welcomes in a weaker period of demand.
In the US, fuel ethanol prices are expected to decrease in the fourth quarter, pressured lower by falling corn prices and a seasonal decline in demand for gasoline. The US Department of Agriculture (USDA) has predicted a significant yield from the corn crop harvest in 2016, which will mean falling corn prices. In turn, this is expected to pull ethanol prices down.
Sources said the outlook for Q4 is bearish, as the combination of cheap corn and good production margins should keep ethanol production rates high. However, while supply will be plentiful, demand is likely to decrease, as the cooler months generally see less demand from drivers for gasoline.
Brazilian ethanol prices have been increasing mainly because of the sugar price. Sugar prices are projected to remain high for the next few years. When sugar prices increase, producers often switch for producing sugar instead ethanol.
The sugarcane harvest in the centre-south, which accounts for 90% of Brazil's ethanol production, runs from April to November/December. Supplies usually lengthen until the end of the season in November/December.
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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.