Green Plains calls for strategic restarts from US fuel ethanol producers

HOUSTON (ICIS)–US Green Plains executives called for restraint when restarting ethanol plants, asking producers to be smart when they bring plants back online, as consistent oversupply has been an historic issue for fuel ethanol markets.

“This is an industry that is renowned for bringing it all back up very fast”, they said.

While some plants have announced longer shutdowns, others are in what is called a ‘warm’ shutdown, wherein a plant can be up and operating within a week.

Around 20% of the shuttered ethanol plants are in a cold shutdown. It will take around six weeks to get one of these plants back online, according to Green Plains.

“An ethanol plant can always be restarted – whether it’s new or old – and this industry is famous for doing the opposite of what is expected”, the company said. “We need to not put ourselves [back] into the situation we have been in for the last two years.”

The company said that if the industry goes back to 80-90% of ‘normal’, that is enough to bring it back to life. What was so different with the coronavirus is that the plants went down so quickly that, for the first time in history, they outpaced demand destruction.

“The industry has reduced its run rate to a record never seen before, and it’s about time”, the executives said.

Ethanol is used as a gasoline blendstock, in pharmaceuticals, and in food and beverage applications, such as hand sanitizers and vodka.