US fuel ethanol industry cuts output, focus remains on industrial ethanol

Author: Alex Snodgrass

2020/03/25

HOUSTON (ICIS)--US ethanol producers are starting to reduce production of fuel ethanol and some are shifting their focus to industrial production as the coronavirus (Covid-19) continues to pressure fuel markets and is increasing the need for sanitizer production.

Fuel ethanol demand is almost halved, according to sources, with fuel demand down by 45% due to stay at home orders in the US.

If this trend continues, it is likely that more fuel plants will follow suit by curbing production or even shutting down entirely, according to sources.

Some fuel ethanol plants are able to switch from fuel production to industrial, although making industrial alcohol from ethanol requires a further step in distillation.

It also requires permits from the US Food and Drug Administration and the federal Alcohol and Tobacco Tax and Trade Bureau.

In a market that is usually dominated by fuel demand, industrial ethanol has taken the spotlight with some sources saying it is the most demand they have ever seen for industrial grade and the US is running out of supply.

Upwards pressure on quarterly US industrial products is expected to continue for one to two months as the coronavirus continues to spread into the western part of the world and especially in the US.