EIA: US fuel ethanol exports rise on strong international demand and low US prices

Fuel ethanol is a renewable fuel made by fermenting sugar from biomass, typically corn in the United States, that is commonly blended with gasoline.

In the first eight months of 2024, US fuel ethanol exports averaged 121 000 bpd — the most fuel ethanol exports in the first eight months of any year.

Exports have been consistently high in 2024, exceeding 100 000 bpd in each of the first eight months of this year. In comparison, US fuel ethanol exports exceeded 100 000 bpd in fewer than one-quarter of the months between 2019 and 2023.

Prior to 2024, how much fuel ethanol did the US typically export?

In each of the past five years (2019 - 23), US fuel ethanol exports averaged between 80 000 bpd and 100 000 bpd. Annual fuel ethanol exports have only ever exceeded 100 000 bpd in 2018, when they averaged 112 000 bpd for the year because of high exports to Brazil. Since 2018, US fuel ethanol exports to Brazil have decreased significantly because of Brazil’s tariffs on ethanol imports and its increasing domestic production.

Where are the increased exports going?

Increased fuel ethanol exports to Canada, Colombia, India, and the UK account for more than 60% of the growth from 2023 to 2024. Fuel ethanol exports have also increased by small amounts to several other countries. In the first eight months of 2024, exports are on track to exceed 2023 volumes to 30 countries and have already exceeded full-year 2023 volumes to 21 countries.

The largest increase in fuel ethanol exports has been to India, which has ambitious fuel ethanol blend targets under its Ethanol Blended Petrol (EBP) programme. India is the third most popular destination for US fuel ethanol exports. After decreasing in 2022 and 2023 due to increasing supply chain costs and elevated U.S. fuel ethanol prices, US fuel ethanol exports to India have rebounded to record volumes in 2024, slightly exceeding the highs from 2017 to 2020.

Although India’s EBP programme prohibits the use of imported ethanol to meet blend targets, India uses imported ethanol for industrial purposes, freeing up domestic product for its transportation blend targets. With reduced production of sugarcane and rice recently, India has relied more on imports of US fuel ethanol to meet industrial sector demand and free up domestic ethanol production for EBP targets.

The second-largest increase in fuel ethanol exports has been to the UK, which became the second most popular destination for US fuel ethanol exports beginning in 2023. Fuel ethanol consumption has been increasing in the UK since the UK government passed an E10 standard in September 2021. In addition, fuel ethanol helps meet the increasing renewable fuel targets in the UK’s Renewable Transport Fuel Obligation program.

The US has also been sending more fuel ethanol to Canada. Canada is already the US’ top destination for fuel ethanol exports and could rely more on US fuel ethanol exports as regional blend mandates and programmes grow.

Colombia remains the fourth-largest destination for US fuel ethanol exports, and this year’s increase is mostly attributable to the reintroduction of an E10 mandate and reduced domestic ethanol production. Exports to Brazil, the Philippines, and Singapore have also increased substantially, although these countries are smaller export destinations.

The US is the largest global producer and exporter of fuel ethanol, and US fuel ethanol prices have been relatively low in 2024. In addition, the EIA expects fuel ethanol exports from Brazil, the second-largest producer and exporter of the fuel, to decrease in 2024 compared with 2023.

The annual average price in 2024 of fuel ethanol on the US Gulf Coast, from where most US fuel ethanol exports depart, has fallen about 25% from 2023 and is its lowest since 2020. On an inflation-adjusted basis, the price is about equal to the prices in 2018 and 2019.

Fuel ethanol production hit a record high in July and is on track for its highest annual level since 2018 because of increased production capacity and low input prices. US fuel ethanol production capacity increased in 2023 and is continuing to grow in 2024. Low input prices have enabled fuel ethanol producers to maintain healthy profit margins and utilisation levels despite the increased competition from new production capacity. Corn, the feedstock used to produce virtually all the fuel ethanol in the US, has been trading at its lowest prices since 2020 because of a strong production outlook and general concerns of an oversupplied market. Natural gas, which is used to fuel production of ethanol, has also been trading at extremely low prices due to record US natural gas production, flat natural gas consumption, and relatively high natural gas inventories.

Read the article online at: https://www.hydrocarbonengineering.com/refining/06112024/eia-us-fuel-ethanol-exports-rise-on-strong-international-demand-and-low-us-prices/