Commodities 2022: Asian Industrial Ethanol Import Prices May Rise

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January 4, 2022

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by Donavan Lim (S&P Global Platts) Far East buyers to pay more for ethanol in 2022; Higher ethanol blending mandate in Philippines in 2022 — Asian industrial and beverage grade ethanol import prices may rise in 2022 as key exporter Brazil sees higher domestic prices and strong sugar valuations.

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Philippines gasoline blenders have to fulfill their domestic ethanol monthly allocations before importing ethanol due to the government’s policy. However, the gasoline blenders usually pay more for domestic ethanol compared with imported ethanol.

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China halted its E10 mandate in 2020 but the country continued to buy US ethanol.

In October and November 2020, numerous US ethanol cargoes were booked for loading period until July 2021 by state-owned companies as the price arbitrage opened between the two countries despite import levies of up to 70% for US denatured ethanol.

After a flurry of deals in late 2020, China stayed largely on the sidelines in 2021 as US ethanol prices soared and the arbitrage between the two countries closed.

However, arbitrage opportunities might open again in 2022 if ties between the two countries thaw, and tariffs are lifted against US ethanol. READ MORE

China to keep tariffs on U.S. distillers grains while conducting review (Reuters)

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