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
Supply of anhydrous fuel-grade ethanol was sufficient through Q1, with the corn harvest in the US continuing at levels similar to the previous year. Hydrous ethanol supply from the US to major export markets still flowed even to China despite high import tariffs and a trade war. Traders were heard moving US cargoes to China via transshipment through Asian ports.
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 can import any material. The US-China trade war also eroded official buying interest for fuel ethanol shipments from the US to China, but a grey import market appeared as traders used back channels to move material.
Domestic supply of beverage 96% and industrial 99% ethanol from Europe producers has inched down this year due to sugar and grain conditions. Domestic supply in France and Germany has contracted in particular, as other markets in central Europe and the Mediterranean remain more balanced. Ongoing imports from Pakistan and Latin America in Q1 has seen normal production from rectification continue. Pharmaceutical grade ethanol and premium beverage ethanol supply has been shortening in Germany and France.
Players in France, Germany and the UK all saw stock-building associated with Brexit in Q1 2019. Buyers, suppliers and producers only disagreed over whether the market is tight-to-balanced or tight as a result in those regions. Demand is usually quite steady year on year, with some end markets seeing varied rising or falling seasonal demand over the year. Demand in most markets has been as expected.
Fuel ethanol supply decreased year on year in Q1 2019, following the key sugar beet harvest season and because of lower wheat supplies previously. Buyers have seen the market as balanced to tight, while producers have said the market is steadily tightening and could be short with high greenhouse gas savings. Ongoing imports have kept supply balanced in the UK, even with ongoing Brexit stock-building efforts. Local supply in France and some part of Germany has fallen in particular.
Demand is generally increasing year-on-year based on higher renewable fuel mandates in many countries, but players say this has been stymied by some countries not introducing E10, as well as double counting rules and the current crop cap. February is normally the moth of lowest demand each year, with lacklustre demand noted after strong January orders as blenders locked in some supply for 2019.
The processing of the harvest/crush during the quarter was lower, 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 shortened over the quarter upon seasonality. Supply has been longer than previous years as producers have chosen to make more ethanol rather than sugar. Sugar prices have been at record lows in recent years.
Demand during the quarter was up as buyers were purchasing at a stable clip as gasoline A prices were firm over the course of the quarter. Brazil blends anhydrous ethanol into gasoline. The country uses hydrous ethanol as a stand-alone 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 weakened during the first quarter, with winter weather and flooding ravaging the Midwest, the primary production area for corn-based ethanol. Industrial ethanol stocks fell slightly, as crop acreage dedicated to high-purity material fell slightly, according to producers.
Demand for fuel ethanol was constant for motor gasoline consumption over the winter months . Fuel ethanol represents about a 10% market share of domestic gasoline demand. Demand for industrial ethanol was steady as well, with cold and flu season that seeing strong demand for antibacterial and cleaning agents.
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
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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.