Viewpoint: US ethanol production threatens recovery

Spanish Market: Biofuels
03/01/20

Rising US ethanol production coupled with limited domestic demand growth and new export barriers could threaten the industry's recovery in 2020.

US ethanol crush margins, which measure the profitability of producing ethanol from corn, climbed to an average 28¢/bushel in November, from 16¢/bushel in September, thanks to falling output and lower corn prices.

But the upward trend waned moving into 2020, on lax production discipline, limited domestic demand growth and lower exports. Margins averaged just 10¢/bushel in December.

An up and down year

In the first eight months of 2019, ethanol production rates were above the five-year average, setting new seasonal records in June and July. But the growing production exceeded demand from domestic gasoline blending and fuel ethanol exports, which led to oversupply and lower prices.

Prompt in-tank transfers of ethanol at Kinder Morgan's Argo terminal near Chicago oscillated between 126.5¢/USG and 154.5¢/USG between January-August, compared with five-year averages that moved between 151¢/USG and 177¢/USG.

In September-October, the ethanol industry showed signs of production discipline as plants closed. The closures balanced out the market by reeling in production to levels that allowed for inventories to drop. Some ethanol companies said in their 2019 third quarter results that fewer plants had created a more balanced market, allowing them to incrementally increase production to keep up with demand.

In September-October prices for prompt in-tank transfers of ethanol at Kinder Morgan's Argo terminal near Chicago strengthened with the plant closures, with prices between 139¢/USG and 157¢/USG compared with five-year averages ranging from 151¢/USG to 161¢/USG.

Lower corn prices also supported margins during September-December. Flooding in the Midwest drove up corn prices in June to an average $4.35/bushel. But prices came down after the US Department of Agriculture' s World Agricultural Supply and Demand Estimates started showing higher than expected post-flooding estimates for planted corn acreage. December prices averaged around $3.78/bushel.

Growing production a threat

Increased production in November and December, however, threaten the production discipline seen in September and October, with output quickly approaching the upper echelons of the five-year range. This suggests inventories could creep up in 2020, which would erode margins again.

The demand outlook has limited growth prospects. US refiners have blended above their required obligation for ethanol D6 RINs for the past six years, and some exports have been met with trade barriers, despite being marketed and sold to over 60 different countries in Asia, Latin America, Europe and the Mideast. India now requires licenses to import ethanol, while Brazil has implemented a tariff rate quota — requirements that have cut the volume of duty-free ethanol imports to both countries.

Adding to stifled foreign demand is the US-China trade dispute. An interim trade deal between Beijing and Washington does not remove tariffs that have cut flows of US ethanol and other energy commodities to China. China will struggle to meet its E10 biofuel blending targets without access to US ethanol, but Beijing says its energy purchases will be "as needed" and based on market fundamentals moving into 2020.

By Thom Dwyer and Jacqueline Reigle

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03/04/25

Funding cuts could delay US river lock renovations

Houston, 3 April (Argus) — The US Army Corps of Engineers (Corps) will have to choose between various lock reconstruction and waterway projects for its annual construction plan after its funding was cut earlier this year. Last year Congress allowed the Corps to use $800mn from unspent infrastructure funds for other waterways projects. But when Congress passed a continuing resolutions for this year's budget they effectively removed that $800mn from what was a $2.6bn annual budget for lock reconstruction and waterways projects. This means a construction plan that must be sent to Congress by 14 May can only include $1.8bn in spending. No specific projects were allocated funding by Congress, allowing the Corps the final say on what projects it pursues under the new budget. River industry trade group Waterways Council said its top priority is for the Corps to provide a combined $205mn for work at the Montgomery lock in Pennsylvania on the Ohio River and Chickamauga lock in Tennesee on the Tennessee River since they are the nearest to completion and could become more expensive if further delayed. There are seven active navigation construction projects expected to take precedent, including the following: the Chickamauga and Kentucky Locks on the Tennessee River; Locks 2-4 on the Monongahela River; the Three Rivers project on the Arkansas River; the LaGrange Lock and Lock 25 on the Illinois River; and the Montgomery Lock on the Ohio River. There are three other locks in Texas, Pennsylvania and Illinois that are in the active design phase (see map) . By Meghan Yoyotte Corps active construction projects 2025 Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

CMA CGM LNG bunker demand up 78pc in 2024

03/04/25

CMA CGM LNG bunker demand up 78pc in 2024

New York, 3 April (Argus) — France-based shipping company CMA CGM increased its consumption of LNG for bunkering by 78pc in 2024 compared with 2023 as part of its efforts to reduce greenhouse gas emissions. The company consumed a total of 9.2mn tonnes (t) of marine fuel last year. LNG accounted for 10pc of total demand, or 962,200t of very low sulphur fuel oil equivalent (VLSFOe) up from 539,200t VLSFOe, or 7pc, in 2023. CMA CGM attributed the overall rise in marine fuel consumption to disruptions in the Red Sea, where geopolitical tensions forced its vessels to reroute around Africa via the Cape of Good Hope. The company has established LNG bunker supply partnerships with TotalEnergies and Shell, securing fuel at key ports including Singapore, Rotterdam in the Netherlands, Fos-sur-Mer in France, and Shanghai in China. CMA CGM has also invested in French firm Waga Energy, which produces biomethane from landfill gas. The company acknowledges methane slip — unburned methane emissions during combustion — is a key challenge with LNG. To mitigate this, CMA CGM has outfitted select vessels with systems that recirculate and combust leaked gas. It is also implementing high-pressure gas injection and is modifying engine intake valves to ensure more complete combustion. Looking ahead, CMA CGM plans to expand its dual-fuel fleet significantly by 2029. It will add 153 such vessels, including 129 that can run on LNG and 24 powered on methanol. In addition to LNG and methanol, CMA CGM is increasing its use of shore power. The number of its vessels equipped with shore-side electric power connections rose to 116 in 2024, representing 38pc of its owned fleet, up from 67 vessels (26pc) in 2023. CMA CGM also utilizes biofuels for bunkering, though demand declined to 50,900t in 2024, from 76,800t in 2023 and 99,800t in 2022, representing just 1pc of its total marine fuel use. In northwest Europe, LNG carried a $144/t premium over VLSFO, in March, with VLSFO averaging $485/t, according to Argus data. Bio-LNG and B30 biofuel there were priced at premiums of $396/t and $338/t, respectively. By Stefka Wechsler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Prio supplies B100 for bunkering in Portugal

03/04/25

Prio supplies B100 for bunkering in Portugal

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Brazil SAF industry set to take off in 2027

02/04/25

Brazil SAF industry set to take off in 2027

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US oil, farm groups push EPA for steep biofuel mandate

01/04/25

US oil, farm groups push EPA for steep biofuel mandate

New York, 1 April (Argus) — The American Petroleum Institute and biofuel-supporting groups told Environmental Protection Agency (EPA) officials at a meeting today that the agency should sharply raise advanced biofuel blend mandates for 2026. The coalition told EPA that it supported a biomass-based diesel mandate next year of 5.25bn USG, up from 3.35bn USG this year, and a broader advanced biofuel mandate, including the cellulosic category, at 10bn Renewable Identification Number (RIN) credits, up from 7.33bn RINs this year, according to three different groups that attended the meeting. Both mandates would be record highs for the Renewable Fuel Standard (RFS) program. Soybean oil futures and RIN credit prices have risen sharply over the past week on optimism that oil and biofuel interests were working to coordinate volume mandate requests for consideration by President Donald Trump's administration. 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Some retail groups, including the National Association of Convenience Stores and the National Association of Truck Stop Operators, instead sent a letter to EPA today arguing that the groups pushing steep volumes are discounting potential headwinds to the sector from new tax credit policy. Some of the groups advocating for higher biofuel volumes have pointed to high production capacity and feedstock availability, but have preferred to ignore thornier issues like tax credits, lobbyists say. "An overly aggressive increase in advanced biofuel blending mandates under the RFS will be punitive for American consumers" without extending a long-running $1/USG tax credit for biomass-based diesel blenders, the retailers' letter said. That incentive expired last year and was replaced by the Inflation Reduction Act's "45Z" credit, which offers subsidies to producers instead of blenders and throttles benefits based on carbon intensity. Generally lower credit values for biomass-based diesel — coupled with the US government's delays setting final regulations on qualifying for the credit — have spurred a sharp drop in biofuel production to start the year. Without a blenders credit, the RFS volume mandates pushed by some groups could increase retail diesel prices by 30¢/USG, the fuel marketers estimate, a potential political headache for a president that ran on curbing consumer costs. Other biofuel groups say that extending the credit would be an uphill battle this year, with some lawmakers and lobbyists instead focused on legislatively tweaking the 45Z incentive's rules to benefit crop feedstocks instead of reverting wholesale to the prior tax policy. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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