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 Q3 2020
Availability improved in the traditional ethanol markets, consisting of industrial 99% and beverage 96%, as demand from the hand sanitizer and disinfectants eased by end-September. Shortages persisted for non-fuel segments of the UK market, while the French, German and Italian markets tilted towards being balanced by the end of Q3. Imports from the US and Brazil provided much-needed supply respite to the European bioethanol fuel market, which remained critically tight.
Demand for industrial 99% and beverage 96% waned through Q3 compared with the hand sanitizer and disinfectants-based buying fervour seen during the peak pandemic months. Hand sanitizer demand remained a prevalent force in the UK industrial 99% market. Bioethanol fuel demand surged during the peak summer driving season, predominantly due to the EU RED II mandates. Shortages in the bioethanol market often led to aggressive bidding for spot volumes that ultimately resulted in record-breaking price hikes.
Q3 supply of ethanol was an estimated 30% higher than projected on reduced fuel consumption. Standalone hydrous ethanol observed better sales than gasoline blended anhydrous grade that had occasion spot trades. There was a significant increase in exports during July of 49%, followed by 9% for August. The US and South Korea have purchased around 80% of locally produced ethanol exports since the start of the 2020/21 harvest in April.
The demand for hydrous ethanol remained stronger than anhydrous in Q3, and low ethanol prices continued to be competitive against gasoline for most fuel stations in Brazil. Hydrous ethanol used in flexible-fuel vehicles (FFVs) competes directly with gasoline. Anhydrous ethanol is blended in gasoline at a mandated 27%. Overall fuel demand loss resulting from pandemic mitigation efforts and less stable ethanol prices prompted producers to favour sugar production.
Supply of fuel ethanol fell in Q3 as demand remained weak as plants remained idled or ran at reduced rates. Inventories of fuel ethanol continued to fall and recently returned to normalised levels. Some fuel producers continue to produce industrial ethanol in order to aid in the hand sanitizer shortage.
Demand for fuel ethanol remained at historically low levels due to stay-at-home orders across the country and due to consumers’ hesitancy to travel. Demand for industrial ethanol remained high due to demand for sanitizers, although this did little to offset the impact from weak fuel demand.
Supply in the Asia market decreased. Some producers switched to produce sugar, which was more profitable, rather than hydrous b grade ethanol. In addition, more than half of harvest season has passed and the limited availability of feedstock further reduced the supply on the sellers’ side.
There was a significant decrease from the demand side since July, especially when compared with Q2, as most downstream users have secured enough cargoes to last until the end of the year. Demand from hand sanitizer producers also decreased along with the easing of the coronavirus pandemic, and with the disinfectants sector saturated in the main import countries such as South Korea and Japan.
Fuel ethanol supply in the import market of southeast Asia saw a significant decrease. Lots of producers have either shut down their plants or lowered operating rates due to poor margins and expectations of weak demand due to the pandemic. In addition, the Mississippi river closure impacted transport efficiency, leaving fewer cargoes in the export ports. Unexpected poor weather conditions dampened the feedstock market, which further lowered the capability of fuel ethanol plants.
Demand was muted in southeast Asia, without any improvement seen during Q3. This is because of travel restrictions due to the pandemic and demand from downstream markets remained muted. In addition, due to the fluctuating upstream oil prices, market participants could not see a clear market direction for gasoline, which is a substitute for fuel ethanol, and this dampened sentiment.
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.