US ethanol market: prices skyrocket, bioethanol replaces synthetic alcohol


IndexBox has just published a new report: “US – Ethyl Alcohol – Market Analysis, Forecast, Size, Trends and Insights. Here is a summary of the main findings of the report.

In November 2021, ethanol prices in the United States reached over $ 3.2 per gallon, doubling from the same period in 2020. Despite this, the last plant in the United States producing ethanol Synthetic has announced the cessation of its activities because it cannot compete with bioethanol in terms of costs. Government investments worth $ 26 million will stimulate the development of biofuel infrastructure in the United States. A conflict between biofuel producers and the Environmental Protection Agency reached a climax as the agency delayed the issuance of the 2022 Renewable Volume Bond (RVO). This document was supposed to propel the bioethanol market by raising standards for the percentage of biofuel used in blends with conventional gasoline and diesel.

Trend and key information

According to the USDA, the Eastern Cornbelt’s average ethanol price rose from $ 1.4 per gallon in January to over $ 3.2 per gallon in November 2021. The largest gains were seen on last month when alcohol prices jumped over 30%.

In the United States, ethanol fuel production has rebounded from its slowdown the previous year. According to the EIA, in the first eight months of 2021, 3.9 million barrels of ethyl alcohol were produced. During the same period of 2020 and 2019, 3.7 million barrels and 4.0 million barrels were produced, respectively.

Global demand for US ethanol is growing. In the first nine months of 2021, US exports of ethyl alcohol amounted to $ 1.83 billion, up 5.8% from the same period in 2020. At the twelfth meeting at the level Ministerial of the Indo-American Trade Policy Forum, the Indian side expressed interest in securing a massive supply of alcohol from the United States. India’s national targets call for increasing the amount of ethanol blended with gasoline to 20% by 2025.

While growing demand and rising prices are good for American ethanol producers, the last synthetic ethanol plant in the United States, Tuscola Plant, owned by petrochemical giant LyondellBasell, has announced it will shut down in late 2021. Faced with rapidly increasing costs. for resources and energy, especially ethylene and natural gas, synthetic ethanol cannot compete with bioethanol. Meanwhile, prices for corn, which is widely used to produce alcohol, have come down this year: the Eastern Cornbelt’s average price of corn fell from $ 7.60 a bushel in May to $ 5.60 in November.

Government policies will stimulate the development of the bioethanol market. The US Department of Agriculture has announced that it will invest $ 26 million in building biofuel infrastructure in 23 states as part of the “Higher Blends” program. The grants will stimulate the replacement of old-fashioned fuel pumps and storage tanks with pumps and blending tanks suitable for E15 and E85 fuels, as well as biodiesel. The USDA predicts that the subsidies will help increase potential sales of biofuels by 822 million gallons per year.

Relations between biofuel producers and government agencies are deteriorating, threatening to become a serious conflict. Growth Energy, the leading U.S. trade association advancing the use of biofuels, has submitted a notice of intent to sue the Environmental Protection Agency (EPA) for failing to timely release the 2022 Renewable Volume Obligation (RVO) , which regulates the standards for blending biofuels with automotive fuels. By maintaining the status quo for RVO, the current standards will not be reassessed to increase the percentage of green energy sources used and thus hamper the growth of the biofuels market.

US exports of ethyl alcohol

In 2020, exports of ethyl alcohol to the United States declined to 6.5 billion liters, down -7.7% from the previous year. In terms of value, ethanol exports contracted to $ 2.4 billion (IndexBox estimates) in 2020.

Canada (1.5 billion liters), Brazil (946 million liters) and India (898 million liters) were the main destinations for US ethanol exports, together accounting for 52% of total exports . South Korea, Mexico, the Netherlands, Colombia, the Philippines, Peru, Nigeria, the United Kingdom and China lag somewhat behind, together accounting for an additional 37%.

In terms of value, Canada ($ 596 million), Brazil ($ 318 million) and India ($ 312 million) appeared to be the largest markets for ethanol exported from the United States to the world , with a combined share of 51% of total exports. South Korea, the Netherlands, Mexico, Colombia, Peru, the Philippines, Nigeria, the United Kingdom and China lag somewhat behind, together accounting for an additional 37%.

In 2020, the average export price of ethanol was $ 0.4 per liter, up 6.1% from the previous year. Prices varied significantly depending on the country of destination; the country with the highest price was the Netherlands ($ 0.5 per liter), while the average export price to the Philippines ($ 0.3 per liter) was among the lowest. In 2020, the most notable price growth rate was recorded for supplies in the Netherlands, while prices for other major destinations saw more modest growth rates.

Source: IndexBox platform


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