Updated to mid-November 2009
Asian market review by Heng Hui, ICIS pricing
Limited import supply and firm demand were providing the undertone to increases in the Asian ethanol markets. Prices rose from $600-640/tonne CFR (cost and freight) NE Asia (northeast Asia) for hydrous ethanol in mid-August to $800-850/tonne CFR NE Asia amid tight supply and increasing offers from the world’s largest producer Brazil by mid-November.
In Brazil, record high sugar prices and rains were keeping ethanol manufacture low and offers high.
Anhydrous ethanol similarly rose from $630-650/tonne FOB (free on board) Asia to $900-950/tonne FOB Asia in the same period.
Some market participants said Chinese material could increasingly determine Asian pricing in the near term, as cargoes were offered at a much cheaper rate compared to the key exporter Brazil. Brazilian prices were now at record highs and so far above Chinese offers, that few buyers were heard seeking Brazilian product.
European market review by Matthew Bristow, ICIS pricing
European ethanol spot prices edged up in some markets in the first half of Q4, as high prices in Brazil, Pakistan and elsewhere reduced imports into Europe. Low inventories, improved demand and high sugar prices led many buyers, traders and producers to forecast price hikes of €1-4/hlt in Q1.
Synthetic ethanol producers saw the cost of ethylene feedstock fall €27/tonne in November, but prices remain sharply up on the level seen in June. There was upwards pressure in the UK market, due to the weakness of sterling.
Ethanol demand has seen a boost from the antiseptic hand wash gels market, as hospitals and business took steps to counter the spread of the H1N1 flu virus. There was strong seasonal demand ahead of the Christmas holiday season from the printing and packaging industries, and the perfume and cosmetics sectors. There were strong sales to the screen wash sector. The market for rectified extra neutral (REN) grade ethanol was tight, due to a fall in imports from Brazil.
US market review by William Lemos, ICIS pricing
US industrial ethanol prices were trending up in the fourth quarter, lifted by higher corn prices and tight supply.
Two producers were heard to have announced a 20 cents/gal increase for 15 November, while a third producer confirmed it would seek a 20 cents/gal hike effective on 1 January 2010.
Industrial ethanol contracts in November were assessed at $2.75-2.95/gal for 190-proof material and $3.00-3.10/gal for 200-proof grade.
US industrial ethanol supply has tightened since the second quarter due to a surge in the consumption of hand sanitizers, resulting from demand related to the H1N1 flu virus.
Industrial ethanol accounts for more than 60% of the contents in hand sanitizers.
Latin American market review by William Lemos, ICIS pricing
Brazilian ethanol prices were on a sharp uptrend in the fourth quarter due to continued supply restrictions caused by heavy rainfall in the centre-south region. The centre-south accounts for around 90% of Brazil’s ethanol production.
Hydrous and anhydrous ethanol prices were assessed in a range of Brazilian real (R) 1,140-1,180/m³ ($671-694/m³) in mid-November, up from 860-880/m³ three months earlier.
Brazil blends anhydrous ethanol in gasoline at 25%, while hydrous is used as a stand-alone fuel in flexible-fuel vehicles (FFVs).
The real traded at around R1.70/dollar in mid-November. That compares with about R1.85/dollar in August.
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Ethanol
Uses and Outlook
The use of ethanol as a fuel is seeing tremendous growth driven by changes in legislation. In North America, demand for fuel ethanol is already growing rapidly, mainly driven by the replacement of methyl tertiary butyl ether (MTBE) which has been eliminated from gasoline as an additive. In Europe, the use of bioethanol (ethanol from fermentation) in fuel has had a slow start but is still expected to grow rapidly.
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Ethanol
Process Technologies
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 alcohol was first produced industrially in the 1930s by indirect catalytic hydration of ethylene but suffered from disadvantages such as corrosion from the large volumes of sulphuric acid handled and the energy required for concentration.
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