Spanish ethanol producers prepare to cut output

Spanish ethanol producers are preparing to cut runs as demand for gasoline drops sharply.

Brokerages said dominant producer Vertex is cutting runs to 70pc of capacity. Vertex — owned by US-based capital fund Trilantic — runs 430,000 t/yr of capacity at Cartagena, Salamanca and Coruna. It does not communicate with the media. The firm has boosted Spanish production significantly in the three years since it bought the plants from bankrupt conglomerate Abengoa.

Spain's other plant, a 35,000 t/yr facility run by conglomerate Acciona, uses wine industry residues as feedstock. It has offered small amounts of product at the start of this year.

There will be some extra demand for ethanol for hand sanitiser production. The Spanish government changed the specification on 4 April, to allow more domestic ethanol to be used. Previously, ethanol used in medical applications in Spain has largely been imported from France and Pakistan. Brokers are unclear if the amount of domestically-produced ethanol heading into sanitiser output will be significant.

Spanish ethanol consumption fell down by 2pc on the year to 20,000t in January according to strategic reserve Cores. The firm revises its data regularly, and the figures for this year and last year are likely to change.

It said Spanish gasoline demand increased to 140,000 b/d in February, a rise of 9.8pc on the year and the highest level for the month in the past nine years. But the effects of movement restrictions imposed by the government to stem the spread of Covid-19 stunted demand in March. Logistics company CLH said its gasoline deliveries fell sharply in the month.

Apparent ethanol production — assessed by Argus using import, export, stocks and demand data — was 35,000t in February, near domestic capacity. Argus estimated output at 405,000t in 2019, up from 335,000t the previous year.

By Adam Porter