US ethanol plants idled as demand collapses

  • Market: Biofuels
  • 27/03/20

US ethanol producers are reducing output and idling plants, as margins tumble with prices amid coronavirus-related quarantine protocols that have slashed motor fuel demand.

Annual US ethanol output capacity has dropped by more than 3bn USG over the past month as producers reduce operations and idle plants, according to trade group Renewable Fuels Association (RFA). That is about 20pc of the roughly 15bn USG blended into the gasoline pool each year. About 30-40 plants are fully idle and another 40-50 have reduced output, RFA chief executive Geoff Cooper said.

Domestic ethanol production slid to a 22-week low in the week ended 20 March, while blending demand dropped to the lowest in six weeks, according to the latest Energy Information Administration data.

Margins on making ethanol from corn have been negative since mid-December as production outpaced demand, but the losses more than tripled this month. Margins fell yesterday to -77¢/bushel, from -24¢/bushel on 2 March, as plummeting crude prices outpaced lower corn futures, while spot ethanol prices hit record lows.

Prices for prompt in-tank transfers at Kinder Morgan's Argo terminal near Chicago have fallen by 34¢/USG, or 27pc, to 93.85¢/USG since early March, when the coronavirus pandemic began to cut fuel demand. US implied gasoline demand last week sank by nearly 9pc, according to the EIA.

Adding to the pressure on fuel prices this month, crude production surged after Opec+ failed to reach an agreement.

The deteriorating economic conditions led agricultural conglomerate The Andersons to idle a plant in Colwich, Kanasas, and shut four jointly owned plants for maintenance as part of a plan to reduce April output to half of capacity. Pacific Ethanol plans to cut production by at least 60pc by the end of this month. And Poet, one of the largest producers of ethanol in the US, is halting corn purchases at some facilities.

Some ethanol plants are shifting operations to produce high-grade ethanol for hand sanitizer and other cleaning products in recent weeks, according to RFA's Cooper. They include Absolute Energy (St. Ansgar, Iowa); Aemetis (Keyes, California); Chippewa Valley Ethanol Company (Benson, Minnesota); Grain Processing Corp. (Muscatine, Iowa, and Washington, Indiana); and Pacific Ethanol (Pekin, Illinois).

Even before the coronavirus outbreak and collapse of the Opec+ agreement, the ethanol sector was struggling from the US-China trade dispute that reduced ethanol exports and from federal waivers that exempted some small refineries from requirements for blending ethanol into gasoline.

A recent 10th Circuit court decision to reduce the number of refineries eligible for exemptions is a silver lining for the industry, as the exemptions have eroded ethanol demand since 2016.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
28/03/24

ACT to partner with LR, Wartsila, and UECC on CNSL

ACT to partner with LR, Wartsila, and UECC on CNSL

London, 28 March (Argus) — Dutch supplier ACT Group is collaborating with classification society Lloyd's Register, Finnish engine manufacturer Wartsila, and Norwegian shipping firm United European Car Carriers (UECC) on the development and evaluation of cashew nut shell liquid (CNSL) as a biofuel in marine biodiesel blends. ACT confirmed the launch of a CNSL-based biofuel called "FSI.100", which has gone through extensive engine testing with various blend combinations. The CNSL-based biofuel has now received approval from engine manufactures to be blended as a 30pc component with marine gasoil (MGO) to form a marine biodiesel blend for the purpose of further sea trials. ACT confirmed that the FSI.100 product will benefit from lower acidity, and there is potential for the product to be compatible for blending with fuel oil. CNSL is an advanced biodiesel feedstock, making it a more appealing and price competitive option to buyers compared with other biodiesel feedstocks. The development follows a report by Lloyd's Register fuel oil bunkering analysis and advisory service (FOBAS) that pointed to a correlation between engine fuel pump and injector-related damage in vessels and the presence of "unestablished" CNSL in the utilised marine fuels. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read more
News

Brazil, France launch €1bn program to protect Amazon


27/03/24
News
27/03/24

Brazil, France launch €1bn program to protect Amazon

Sao Paulo, 27 March (Argus) — Brazil and France launched a four-year, €1bn ($1.1bn) investment program to protect the Amazon rainforest using private and public funds, the countries said on Tuesday as French president Emmanuel Macron is visiting the South American nation. "Gathered in Belem, in the heart of the Amazon, we, Brazil and France, Amazonian countries, have decided to join forces to promote an international roadmap for protection of tropical forests," the two countries said. Under the program, Brazil's public banks — such as the Bndes development bank — and the French development agency will form "technical and financial partnerships." The two countries also agreed to develop new research projects on sustainable sectors and create a research hub to share technologies to develop the bioeconomy. Macron and Brazilian president Luiz Inacio Lula da Silva visited Belem — near the mouth of the Amazon and the host city of Cop 30 — on 26 March. During the trip, indigenous leader and environmental campaigner Raoine Metuktire, of the Kayapo tribe, urged Lula to prevent construction of the 900km (559-mile) Ferrograo railroad , which could lower costs of transporting grains from Mato Grosso state, Brazil's largest agricultural producer. Macron will also visit Rio de Janeiro, Sao Paulo and capital Brasilia. This is his first trip to Brazil, as he had cut ties with the South American country during former president Jair Bolsonaro's administration. Bolsonaro put little focus on environmental protections during his term, policies that his successor has reversed. Brazil now aims to reach zero deforestation by 2030. It reduced deforestation in the Amazon by almost 50pc last year, according to government data. Deforestation in the region hit 196km² in January-February, a 63pc drop from the same period in 2023 and a six-year low, according to NGO Imazon, which focuses on research to promote climate justice in the Amazon. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Ethanol constraints minor on Baltimore closure: Update


27/03/24
News
27/03/24

Ethanol constraints minor on Baltimore closure: Update

Houston, 27 March (Argus) — Ethanol flows in the US northeast may only see minor near term constraints following the closure of the Port of Baltimore due to the collapse of a bridge at the mouth of the waterway. Producers and other market participants expect longer local transit times for trucks carrying hazardous materials — including ethanol — to retail stations because of the collapse of the Francis Scott Key Bridge, which carried nearly 12.4mn cars and trucks in 2023, according to Maryland state data. This will lead to higher associated costs, but market sources say the region's supply chain flexibility, rail access and available stocks should mitigate near-term ethanol supply interruptions. Ethanol rail deliveries into the Baltimore market are expected to increase, offsetting the loss of barge supply for the duration of the port's closure. Railroads Norfolk Southern and CSX have rail access at the Port of Baltimore, while Kinder Morgan operates the primary transload terminal. US east coast ethanol stocks in March are at their highest monthly average since April 2020 at 8.76mn bl, according to the Energy Information Administration. By Payne Williams Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Ethanol constraints minor from Baltimore port closure


27/03/24
News
27/03/24

Ethanol constraints minor from Baltimore port closure

Houston, 27 March (Argus) — Ethanol flows in the US northeast may only see minor near term constraints following the closure of the Port of Baltimore due to the collapse of a bridge at the mouth of the waterway. Producers and other market participants expect longer local transit times for trucks carrying hazardous materials — including ethanol — because of the collapse of the Francis Scott Key Bridge, which carried nearly 12.4mn cars and trucks in 2023, according to Maryland state data. This will lead to higher associated costs, but market sources say the region's supply chain flexibility, rail access and available stocks should mitigate near-term ethanol supply interruptions. Ethanol rail deliveries into the Baltimore market are expected to increase, offsetting the loss of barge supply for the duration of the port's closure. Railroads Norfolk Southern and CSX have rail access at the Port of Baltimore. US east coast ethanol stocks in March are at their highest monthly average since April 2020 at 8.76mn bl, according to the Energy Information Administration. By Payne Williams Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

European bio-bunker March prices firm on uncertainty


27/03/24
News
27/03/24

European bio-bunker March prices firm on uncertainty

London, 27 March (Argus) — Marine biodiesel prices firmed in the second half of March across Europe as higher levels in underlying markets combined with supply uncertainty to lend support to blend prices, despite limited demand. Very-low sulphur fuel oil (VLSFO) firmed by $16/t to $585.58/t on a dob Amsterdam-Rotterdam-Antwerp (ARA) basis and $17.47/t to $628.17/t on a dob Gibraltar-Algeciras-Ceuta (GAC) basis during 14-26 March compared with the two weeks prior. Gains in the fossil market were mainly attributed to an increase in European refinery turnarounds as well as stronger crude values. The front-month Ice Brent crude futures 16:30 GMT marker averaged $86.07/bl on 14-16 March, an increase of $2.92/bl from 1-13 March. Rising fossil levels were accompanied by increases in the biodiesel spot barge market. Prices for advanced fatty acid methyl ester (Fame) 0°C cold-filter plugging point (CFPP) on a fob ARA barge basis averaged $1,407.15/t during the last two weeks of March, a $53.58/t rise from 1-13 March. Used cooking oil methyl ester (Ucome) barges firmed by $47.47/t to $1,316/t during the same timeframe. Biodiesel prices have firmed from long-term lows on the back of a reduction in European production and limited demand. Higher prices in underlying markets were accompanied by an emerging theme of biofuel supply uncertainty. Participants reported that European suppliers may look to steer away from Chinese-origin biodiesel as the EU's anti-dumping investigation continues, with a conclusion by early 2025 at the latest. This was compounded by chronic disruption in the Red Sea, historically the most utilised route on the east-west voyage, leading to traffic redirecting via the Cape of Good Hope and a subsequent increase in freight costs. The potential shift in supply routes can be supported by changes in product flows. Some 19,000t of Fame has been exported from China with a marked destination in Europe in March so far, an 80pc drop from February's 106,000t — according to Kpler data. This month's exports are just 10pc of the 184,000t exported from China to Europe in March last year, according to Kpler. Declining volumes from China were accompanied by an increase in Fame volumes exported from northwest Europe intra-continental to 409,000t in March from 364,000t a month prior. GTT data pointed to a 47pc decline in Chinese biodiesel exports in January-February, coinciding with an increase in Chinese exports of used cooking oil (UCO) with northwest Europe the main destination. Uncertainty in the supply import pool coincided with raised concerns around the presence of "unestablished" biodiesel feedstocks in bunker fuels. A report from Lloyd's Register fuel oil bunkering analysis and advisory service (FOBAS) highlighted a correlation between engine fuel pump and injector related damage in vessels and the presence of cashew nut shell liquid (CNSL) in marine fuels utilised by the vessels. CNSL is one of the cheaper advanced feedstocks and can be eligible for Dutch renewable tickets (HBE-G) — which can help make marine biodiesel blends more appealing and price competitive to buyers, as well as reduce production costs. But participants noted that during tests conducted by shipowners to assess the compatibility of CNSL with marine engines, technical and specification limitations emerged because of potentially high acidity and metal contents. This prompted shipowners and bunker suppliers to avoid fuels that contain CNSL, which may further constrict the pool of biodiesel supply that can be integrated into the maritime sector. Argus assessed the price of B30 Ucome dob ARA, a blend comprising 30pc Ucome and 70pc VLSFO, at $839.17/t during 14-26 March — an increase of just under $22/t from the 1-13 March average. B30 Advanced Fame 0°C CFPP dob ARA range averaged just over $785/t during 14-26 March, higher by $16.19/t from the two weeks prior. B100 Advanced Fame 0 levels rose by $16.62/t to $1,159.79/t in the second half of March. B24 dob Algeciras-Gibraltar firmed to $812.61/t in 14-26 March, an increase of $19.50/t from prices on 1-13 March. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more