Pacific Ethanol to idle over 60% of capacity on weak fuel demand

Author: Alex Snodgrass

2020/03/27

HOUSTON (ICIS)-- US ethanol producer Pacific Ethanol plans to idle at least 60% of their capacity by the end of March, according to an investor presentation.

The coronavirus has resulted in many statewide stay at home orders, which is cutting gasoline and fuel ethanol demand by at least 50%, according to the company.

This has resulted in negative margins for fuel ethanol production and is complicating an already oversupplied fuel market.

Meanwhile, Pacific Ethanol says it continues to focus on alcohol production to be used in santizers and are doing everything possible to increase capacity to meet the uptick in alcohol demand.

The company also said that they are producing and shipping record amounts of alcohol to be used in santizers.

"This is a shock to the industry that was needed to bring production down, as hard as that is to say," the company said.

"It's imperative because demand is not there for the product and margins are negative."

The company also said that they expect to see a more balanced market once coronavirus concerns are gone and is considering other sales of assets or strategic partnerships to help during this time.

Visit the ICIS coronavirus topic page for analysis of the impact on chemical markets and links to latest news.