Quarterly Update on Global Ethanol Market
For the Quarter Ending June 2021
Ethanol prices traced an upward trajectory during this quarter in USA, backed by firm downstream demand and feedstock shortage in the country. Major reason behind the consistent rise in prices was huge shortage of feedstock corn and sugarcane in the global market. Major USA exporters revealed that demand for feedstock corn from China increased effectively over this period, which also affected the prices of feedstock corn in US market. Therefore, huge spike in prices of feedstock commodities and high demand from fuel blending sector led to a consistent rise in prices of Ethanol in the country. Thus, prices of Ethanol hovered around USD 1585/MT during the final week of June in USA.
Prices of Ethanol increased in Asia during this quarter, backed by several domestic and global factors. In India, the rise was primarily driven by strong domestic demand following high consumption from sanitizer manufacturers under resurgence of pandemic. Besides, demand from pharmaceuticals sector remained firm throughout the quarter in Indian market. Meanwhile, China faced huge shortage of feedstock corn and sugarcane in the country, and manufacturers were compelled to procure expensive feedstock from USA, which led to a consistent increment in price of Ethanol in the country during this timeframe. Therefore, after an effective rise throughout the quarter, prices of Ethanol hovered around USD 1040/MT in the last week of May in India.
European market experienced frequent fluctuations in demand for Ethanol during this quarter. Uncertainties regarding pandemic cases in the major Europe maintained the market volatility of the region, which caused an uncertain demand outlook during this quarter. Prices kept on rising due to international pressure, where feedstock prices pushed up the prices of Ethanol in the global market. Therefore, despite of the demand volatility, prices of Ethanol remained firm across Europe during Q2 2021.
For the Quarter Ending March 2021
In the Asian markets, overall demand for Ethanol remained firm from the downstream sectors during Q1 2021. In China, demand from the disinfectant sector maintained stability over the prior quarter. Furthermore, to satisfy this demand, China imported a huge quantity of Ethanol from the US. In addition, feedstock corn prices in China were 35-45% high. Meanwhile, in the Indian market, heavy availability of feedstock sugarcane pushing down the prices of Ethanol for 3 months consecutively, CFR India prices of Ethanol settled down from USD 883.2 per MT (January 2021) to USD 750 per MT (March 2021).
In North America, the price of Ethanol surged due to production cuts and high demand from the domestic consumers as well as for exports. Ethanol prices skyrocketed during Q1 2021 as an effect of low feedstock corn availability. Furthermore, winter season disrupted the production activity across the gulf coast that led several production plants to face unplanned shutdowns during January-February. In addition, USA exports skyrocketed due to sudden rise in export demand from China.
Limited supply for Ethanol across the region supported its prices during Q1 2021. Though Europe is largely depending upon Ethanol imports from USA, tight supply kept a tab on the product availability. The supply from USA remained low due to low feedstock production and high exports and domestic demand in the country. Meanwhile the demand from disinfectant or sanitizers manufacturers remained stable throughout the quarter.
For the Quarter Ending September 2020
The Asian Ethanol market faced marginal supply shortage as a fuel as well as an additive in beverage. With fears of resurgence of coronavirus in several parts of the region, the demand for Ethanol is expected to receive further boost as a feedstock for sanitizer and cleaning products in the coming months. Meanwhile, as traders and several downstream buyers are looking forward to pile-up feedstock to prepare for the tightened supply after the harvest season, the demand for Ethanol is anticipated to further move up. Capacity additions and expansions for Ethanol production on enhanced government support in India is likely to provide relief on the supply side in the near future.
The European Ethanol market witnessed further gains with travelling and trade activities tracing pre lockdown levels resulting in its increased demand as fuel. Manufacturers and traders remained optimistic over improved offtakes of the product as end-use industries begun stock piling ahead of the winter season to eliminate risk of supply shortage in the next quarter. However, with the fresh wave of coronavirus cases frightening the country in early September, an astonishing fear of demand uncertainty has prevailed in the near term.
The demand for Ethanol in North America showcased stagnancy after a rapid spring rally in the previous quarter. In August and September, the demand as well as the production plateaued and settled below the critical levels in comparison to thick corn harvest. As per the available data, the demand is primarily a result of the falling stock in contrast to the consistent rise in production since the beginning of July. The upward trend in Ethanol demand as fuel is also in jeopardy, with U.S ending with its peak seasonal travelling months.