Ethanol Prices (Q1 2022)
Some domestic ethanol manufacturers' quotations increased towards the end of March. The Jilin Dongfeng Hualiang corn alcohol facility, which produced 100,000 MT per year, was shut down. In several Chinese provinces, the external quotation for regular alcohol was 7150-7200 RMB/MT. Henan Hanyong Alcohol Co., Ltd.'s 300,000 MTPA ethanol facility was also shut down, and the quotation was hiked to 7300 RMB/MT, including tax.
Europe's ethanol spot prices is expected to continue to trade at a significant premium to Eurobob oxy grade gasoline in 2022, as a result of prolonged restricted supply and increased demand for greater ethanol mixes in countries such as Germany, France, and the United Kingdom.
Ethanol Prices (Q4 2021)
The market in North America remained stable throughout the fourth quarter of 2021. The demand expectation for local and international markets surpasses production capacities, as high grain prices caused facilities to scale back production. Several facilities, on the other hand, declared turnarounds ahead of schedule in order to avoid expensive input. Numerous market participants predicted that the current trend would likely continue into the following quarter. As a result of this ripple effect, offers reached an all-time high in Q4 2021, while FOB California negotiations crested at 694 USD/MT in November 2021.
In the Q-4 of 2021, the Asia Pacific ethanol market steadily increased the prices, demonstrating different sentiments across areas. Offers increased across the Asia Pacific region for a variety of reasons. However, in India, the government's choice to increase local production resulted in a bigger global sugar supply imbalance. Additionally, a joint venture between GAIL and GACL has established a second-generation bioethanol factory in Gujarat, India. As a result, the Ex-Mumbai offers were resolved at 810 USD/MT in the quarter ending December 2021.
In July 2021, the EU Commission proposed the "Fit for 55 Package '' to line with European Climate Change, which establishes higher standards for carbon neutrality by 2050. Whereas Europe's domestic market sentiments remained down due to the ongoing energy shortage and constrained natural gas supplies. In terms of demand growth, the German market fell short of the advances seen in France and the United Kingdom in 2021. As a result, offers in Germany remained buoyant, and the price for the quarter ending in December 2021 was at 1056 USD/MT.
Sugar's significant price premium over ethanol, the volatility of the Brazilian real/US dollar exchange rate, and the uncertain changes in the Petrobras' gasoline price will all continue to be significant drivers of the chemical’s prices in 2022. The severe weather and fires that occurred in 2021 also harmed planting activities and injured sugar cane roots, potentially reducing production in the 2022-23 crop season. The volatility of the Brazilian real against the US dollar will continue to influence ethanol mills' decisions to prioritise sugar or ethanol output in 2022.
Ethanol Prices (Q1-Q3 2021)
In North America, the price increased as a result of production reduction and increased demand from local consumers and export markets. Prices soared during Q1 2021 due to a scarcity of feedstock corn. Additionally, the winter season interrupted industrial operations along the Gulf Coast, forcing some production plants to shut down unexpectedly in January and February. Additionally, USA exports soared as a result of China's unexpected increase in export demand.
The prices in the United States increased during the third quarter, supported by strong downstream demand and a feedstock bottleneck in the country. The primary reason for the continual increase in pricing was the worldwide market's severe lack of feed corn and sugarcane. Major US exporters stated that demand for maize from China surged significantly during this time period, affecting feedstock corn prices in the US market. Thus, a sharp increase in the price of feedstock commodities and increased demand from the fuel combining industry resulted in a steady increase in the price of the chemical in the country. Thus, price in the United States stayed around 1585 USD/MT throughout the final week of June.
The prices increased dramatically in the North American market in Q3 2021. Limited availability of feedstock, logistical challenges, tight production, and an ongoing rise in crude oil costs all contributed to the region's skyrocketing its prices in Q3. During the quarter, interest from major downstream sectors increased. Exporters indicated that China's demand for corn surged significantly in Q3 2021, thus affecting feedstock corn prices in the US market. Several plant turnarounds recorded as a result of Hurricane Ida's aftermath impacted regional supplies. In the fourth week of September, the FOB price in the United States was 849 USD/MT.
In Asian regions, demand for ethanol from downstream sectors remained strong in Q1 2021. In China, disinfection demand remained stable compared to the previous quarter. Additionally, to meet this demand, China imported a large amount of the product from the United States. Additionally, China's feedstock grain prices were 35-45 percent higher. Furthermore, in the Indian market, abundant supply of feedstock sugarcane pulled down Prices for three consecutive months, with CFR India prices falling from 883.2 USD/MT in January 2021 to 750 USD/MT.
Prices surged in Asia during the third quarter, owing to a number of domestic and global variables. In India, the increase was mostly driven by increasing domestic demand as a result of high consumption by sanitizer producers during the pandemic's return. Additionally, demand from the pharma industry remained strong in the Indian market throughout the quarter. Meanwhile, China suffered a severe shortage of feedstock corn and sugarcane, forcing producers to import costly feedstock from the United States, resulting in a constant increase in the price of ethanol in the country during this time period. Thus, following a sustained increase throughout the quarter, prices in India hovered around 1040 USD/MT in the final week of May.
Prices in the Asia Pacific area were constant throughout the third quarter of 2021. During Q3, disruptions in the procurement of the chemical were reported, owing to rising freight prices in China. In September, the price in India was roughly 726 USD/MT. The country's price trend remained consistent due to sustained domestic demand and significant stock availability. Market participants stated that the goal of blending 20% ethanol into gasoline is becoming more difficult due to the rising inflation in its feedstock prices.
The chemical’s limited availability across the region bolstered its pricing in Q1 2021. Though Europe is heavily reliant on ethanol imports from the United States, tight supply constrained product availability. The supply from the United States of America remained limited due to the country's low feedstock production and high exports and domestic demand. Meanwhile, demand from manufacturers of disinfectants and sanitizers remained constant throughout the quarter.
Throughout this quarter, the European market saw regular swings in ethanol demand. Uncertainties regarding pandemic instances in major Europe exacerbated the region's market instability, resulting in an unclear demand picture for the current quarter. Prices continued to rise as a result of international pressure, with feedstock prices pushing up the prices on the worldwide market. As a result, despite the volatility in demand, prices remained stable across Europe in Q2 2021.
In the third quarter of 2021, the European market saw a price increase due to limited raw material supply, strong purchasing power, lower industrial production, and increased logistic costs. During Q3, demand increased at an exponential rate from downstream industries. Due to worldwide pressure, pricing in the European region remained on an upward trajectory.
Brazil's sugar and ethanol output increased above estimates in the first half of May 2021, catching up with past season delays and approaching levels observed at this time last season, when the country harvested a record sugar crop. In the first half of May 2021, mills produced 2.37 MT of sugar. Following this, sugar prices fell by around 2%. Cane processing had been significantly lower than in the previous season, as harvesting delayed owing to poor cane development induced by drier-than-normal weather. Industrial yields also increased, as the amount of sugar produced per tonne of cane processed increased to 131 kg/tonne, 0.39% more than at the same time in 2020. However, the sugar cane harvest in 2021-22 was among the most difficult on record. Throughout the first half of the year, Covid-19 pandemic precautions drastically restricted demand for motor fuels. After July, adverse weather conditions significantly restricted the quantity of fodder available for processing, creating fears of ethanol shortages and an increase in imports to compensate for the domestic supply constraint. Along with a prolonged drought, the cane crop was harmed by three waves of frost in July, which limited cane crushing in the majority of the country's major producing states. In October, other states also had record-breaking wildfires. Despite this season's low sugarcane harvest, the sector has accumulated sufficient inventories to meet its demand. To assure adequate domestic supply, some mills altered production to increase the proportion of anhydrous ethanol in the mix. Others converted hydrous ethanol to anhydrous form by eliminating water in order to combine it with gasoline.
Ethanol Prices Overview 2020
In North America, demand for ethanol remained stagnant following a strong spring increase in the previous quarter. In August and September, both demand and output reached a plateau and stabilised below critical levels, owing to the abundant grain harvest. Demand was primarily driven by dropping stock levels in contrast to a steady increase in output since the beginning of July. The growing trend in its consumption as a fuel was also under threat, as the United States neared the conclusion of its prime seasonal travel months.
As a fuel and as a beverage additive, the Asian Ethanol industry encountered marginal supply constraints. With fears of coronavirus reappearance in numerous parts of the region, demand for the chemical as a feed for sanitizers and cleaning goods increased further in the coming months. Meanwhile, as dealers and downstream purchasers stockpiled feedstock in anticipation of a constrained supply following the harvest season, the market was expected to increase further. Capacity upgrades and increases for ethanol production in India, aided by increased government backing, alleviated supply constraints.
The European Ethanol industry continued to grow, with travel and trade activity returning to pre-lockdown levels, resulting in an increase in its demand as a fuel. Manufacturers and traders maintained their optimism about increased product offtakes as end-use sectors began stockpiling prior to the winter season to avoid a supply deficit in the coming quarter. However, with a new wave of coronavirus infections scaring the country in early September, an extraordinary concern of price volatility prevailed in the short term.
Prior to the COVID-19 epidemic, the top five ethanol producers were the United States, Brazil, the European Union, China, and Canada. Brazil's total corn-based ethanol production reached 2.5 billion billion litres in 2020, an increase of 1.17 billion litres over 2019. The COVID-19 epidemic had a disproportionate impact on the worldwide biofuels industry. The global biofuel output dropped by 12% in 2020, compared to the global record set in 2019, marking the first time in two decades that annual production would decline. The decline was caused by both decreased demand for transportation fuels and lower fossil fuel costs, which reduced the economic appeal of biofuels. In 2020, Brazil's production experienced one of the steepest year-on-year declines since 2011.
Procurement Resource provides latest prices of Ethanol. Each price database is tied to a user-friendly graphing tool dating back to 2014, which provides a range of functionalities: configuration of price series over user defined time period; comparison of product movements across countries; customisation of price currencies and unit; extraction of price data as excel files to be used offline.
Procurement Resource provides prices of Ethanol for several regions around the globe, which are as follows:
Ethanol is a clear, colourless liquid with an ethyl group joined to a hydroxyl group. It is commonly consumed as a recreational drug across the globe. Due to its bactericidal activity, Ethanol is also utilised as a topical disinfectant. Further, it is a significant substance that is used across several manufacturing industries and serves as an alternative for fuel source.
Chemical Formula of Ethanol:
Ethanol production via fermentation involves the use of crops that are rich in starch, such as, sugar cane, corn, maize, etc. In this process, a certain species of yeast like Saccharomyces cerevisiae is cultured under favourable conditions, which metabolises sugar to produce Ethanol and carbon dioxide. It is further distilled to obtain higher concentration of the product.
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The displayed pricing data is derived through weighted average purchase price, including contract and spot transactions at the specified locations unless otherwise stated. The information provided comes from the compilation and processing of commercial data officially reported for each nation (i.e. government agencies, external trade bodies, and industry publications).
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