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2013 US/Brazil ethanol imports

Hydrocarbon Engineering,

Last year, according to the US EIA, US imports of sugarcane ethanol from Brazil fell by 40% to 242 million gal. As Brazil is the largest source of ethanol imports to the US, this drop led the US to be a net exporter of the product for the year. Export volumes of corn based ethanol to Brazil declined, but were more than offset by higher export volumes to Canada and a number of other countries. Even though the net level has varied from month to month, since 2011, the US has both imported ethanol from and exported ethanol to Brazil.

US versus Brazil

Ethanol is mainly used as a blending component in the production of motor gasoline. The US and Brazil are the two largest producers and exporters of ethanol in the world, with ethanol being produced from corn feedstocks in the US and sugarcane in Brazil. Starting in 2010, growing corn harvests and limited growth in the domestic ethanol market led the US to become a net exporter of ethanol and the world’s leading supplier. At the same time, decreased sugarcane harvests in Brazil led to significant reductions in Brazilian ethanol output and a reversal in traditional ethanol trade patterns, as US volumes began entering Brazil to meet domestic demand.

Brazilian ethanol

In 2012, Brazilian ethanol production recovered. This reduced Brazil’s need for Us ethanol imports, while Brazil exported significant volumes to the US, largely due to growing US RFS targets. In addition to the RFS, the LCFS creates an incentive to import sugar based ethanol from Brazil because of its lower carbon intensity, seen in imports of ethanol into the West Coast from Brazil.

Brazilian ethanol output typically peaks during the fourth quarter of each year. In the fourth quarter of last year, Brazil had a record sugarcane harvest and increased ethanol production. However, US imports of ethanol from Brazil dropped by 95% compared with the fourth quarter of 2012, when drought in the US pushed domestic production to record low levels. Another major driver was the US EPA’s announcement of proposed reductions to 2014 RFS as well as growing volumes of biomass based diesel imports.

US ethanol

The remaining volumes of ethanol imported into the US from other countries came from Canada or countries that have facilities to convert hydrous sugarcane ethanol originally produced in Brazil to anhydrous ethanol for the US market. US ethanol imports energy the nation mainly on either the East or West Coasts. West Coast imports of ethanol averaged 30% of total US imports. Despite the geographic disadvantage of shipping in Brazilian ethanol on the West Coast compared to other Us regions, imports to PADD 5 continued to benefit from the advantage that sugarcane ethanol provides in meeting the California LCFS. The LCFS regulates the carbon intensity (CI) of gasoline and diesel fuels sold in the state. Depending on the production process, Brazilian sugarcane ethanol has among the lowest CI values of any fuels currently available for meeting the LCFS target.

2013 and 2014 trends

Last year, the US imported 306 million gal. and exported 622 million gal. of ethanol, the latter of which was the third highest annual total on record. The US remained the world’s largest supplier of fuel ethanol, despite high corn prices and increased domestic demand. Canada received more than half of all US ethanol exports, with its total reaching 325 million gal. US exports to Brazil fell to 33 million gal., as increasing volumes of Brazilian ethanol were available for domestic consumption. US ethanol exports made their way increasingly to other countries in Latin America, as well as Europe, the Middle East and new locations in Africa and Asia.

For 2014, the US is expected to remain a strong net exporter of ethanol, with the potential for substantially larger levels of exports, given the recent abundant corn crop and EAP’s proposed reduction in domestic RFS targets. While favourable blending economics are likely to drive domestic ethanol demand, the US is likely to remain the world’s leading ethanol supplier. US ethanol import volumes in 2014 will likely be contingent on a combination of Brazilian sugarcane yields, final advanced biofuel RFS targets, and imported volumes of competing advanced biofuels, such as renewable diesel.

Adapted from a press release by Claira Lloyd.

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