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.
Updated to Q1 2019
The supply of anhydrous fuel-grade ethanol was tighter in Q2 as wet weather conditions and high water levels in parts of the US hit the corn harvest. Hydrous ethanol supply from the US to major export markets still flowed but shipments to China slowed due to high import tariffs and efforts to clamp down on the movement of cargoes via transshipment hubs in southeast Asia.
Demand decreased as the Philippines, the main export destination for US fuel-grade ethanol in southeast Asia, increased requirements for blenders to purchase locally-produced ethanol under a quota system before they could import any material. The renewed US-China trade war also hit buying sentiment and reduced trade flows.
2Q began with a balanced but tightening market, which was more sensitive to import volumes. Both the 99% industrial and the 96% beverage markets continued to tighten, but the tightness in 99% industrial material was more noticeable. Imported volumes from Pakistan fell, and a lift on antidumping duties on US ethanol did not see import levels from North America rise noticeably. Domestically, some producers lowered output due to feedstock availability or margin pressures. Producers who could, favoured fuel ethanol production.
Demand was steady after a brief lull for some French, UK and German buyers who had stocked up in preparation for an unconsummated Brexit at the end of March. The screenwash season ended early in the quarter and there was demand for additional industrial volumes in Germany.
Fuel ethanol market supply tightened in Q2 2019 as demand increased. There have been regular but low level US ethanol imports after antidumping duties were removed. Most key domestic production levels have also fallen. One test of tightness has been price volatility in reaction to delayed import cargoes. Supply-demand has not been uniform. In May, a local ethanol buyer stopped supplying ethanol in fuel due to lower local production rates, while elsewhere ARA stocks were high.
Demand has increased over the second quarter this year due to rising biofuel blending targets and in the run up to the driving season in Europe. France policy has seen an increase in bioethanol blending rates.
The processing of the harvest/crush continued during the second quarter as is normal for the seasonal nature of the industry. The sugarcane harvest in the centre-south, which accounts for 90% of Brazil’s ethanol output, runs from April to November/December. Supply lengthened over the quarter on seasonality. Supply was longer than previous years as producers chose to make more ethanol rather than sugar. Sugar prices have been at record lows in recent years.
Demand during the quarter was steady as gasoline A prices were stable over the course of the quarter. Brazil blends anhydrous ethanol into gasoline. The country uses hydrous ethanol as a standalone fuel in flexible-fuel vehicles (FFVs), competing directly with gasoline. Many Brazilian drivers own flex-fuel cars which allow switching from gasoline to ethanol. Drivers only substitute for ethanol if its price is less than 70% that of gasoline.
US ethanol supply was lower during the second quarter, slipping after heavy rain and the fallout from wintry weather that led to flooding in the Midwest. US government figures showed stockpiles to be just over 21m bbl for the quarter, with production averaging just over 1m bbl/day. Industrial ethanol stocks fell slightly, as crop acreage dedicated to high-purity material fell slightly, according to producers.
Demand for fuel ethanol was robust as motor gasoline consumption in the US continued to hit records. Fuel ethanol represents about a 10% market share of domestic gasoline demand, and has been permitted to increase to 15% nationwide.
We offer the following regional Ethanol analysis and news coverage to keep you informed of factors and developments affecting prices in the Ethanol marketplace.
News & analysis
ICIS price assessments are based on information gathered from a wide cross-section of the market, comprising consumers, producers, traders and distributors from more than 250 reporters world-wide. Confirmed deals, verified by both buyer and seller, provide the foundation of our price assessments.
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There are two main types of ethanol – fermentation and synthetic. The major outlets for industrial ethanol are as a solvent and in chemical synthesis.
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.
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