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Grain Processing Corporation (GPC)  has announced a GNS beverage grade ethnaol price increase of $0.08 per proof gallon beginning February 1, 2010. They have advised their customers that in order to ease the impact of this increase, it will be phased in, with a February 1, 2010, price increase of $0.04/proof gallon above the 1/1/10 price, and a March 1, 2010 price increase of $0.04/proof gallon over the 2/1/10 price.  GPC is citing increasing feedstock costs and increasing energy cost to produce high quality GNS. Both the beverage grade and the industrial market continues to experience very strong demand.  In addition to the GNS beverage grade announcement, GPC has announced an industrial ethanol price increase.  Effective January 1, 2010, Grain Processing Corporation will increase all schedule and off-schedule prices for 190 and 200 proof pure and all denatured industrial ethyl alcohol formulations by $0.20 per wine gallon, not to exceed list price schedule. Strong demand and tight inventories are expected to continue well into 2010.

MGP Ingredients, Inc. today announced it has entered into a joint venture agreement with SEACOR Energy, Inc.’s affiliate, Illinois Corn Processing Holdings, Inc., to reactivate distillery operations at MGPI’s facility in Pekin, Illinois.  The facility will be owned and operated by a separate entity called Illinois Corn Processing, LLC and initially will be dedicated to the production of alcohol for beverage, industrial and fuel applications.  Production is expected to begin in the near future...more

David Dykstra has been promoted to vice president of alcohol sales and marketing at MGP Ingredients, Inc. (MGPI) effective immediately. He brings over 20 years of sales and marketing experience to his new position, most recently serving as industrial alcohol sales manager at the company since 2006...more

The Industrial Ethanol Association (IEA) is pleased to announce the recent appointment of Pascale Rouhier as Secretary General.  Pascale Rouhier has six years’ experience in international trade, including previously representing trade associations in agriculture and commodities as Secretary General. IEA’s members are synthetic ethanol producers INEOS, PetroSA Europe, and Sasol Solvents Germany.  Its objective is to represent the interests of this sector to policymakers and other stakeholders in order to promote fair competition and maintain a healthy European ethanol market.  Synthetic ethanol is produced from fossil fuels and is used in the industrial market, mainly for pharmaceuticals, cosmetics, inks and industrial chemical products...more


The United States industrial market is poised for a round of price  increases next month.  A number of suppliers have announced a 45 cent per gallon price increase effective April 1, 2008, which represents a market increase of approximately 16% to 19%.  

Industrial ethanol is typically negotiated on an annual basis, and many 2008 contracts were negotiated back in November 2007, with $3.75 per bushel corn.  Corn closed at $5.392 yesterday, with recent excursions above $5.60 per bushel.  Corn prices are now $1.65 to $1.85 per bushel higher than when many 2008 contracts were negotiated, representing a cost increase of between 45 and 55 cents per gallon.  No doubt producers hedge corn with some larger contracts, but hedging programs expire, and at some point, costs will be realized by the producer, and at some point, will need to be passed on to the marketplace.

Meanwhile, fuel ethanol prices have exploded, and much of the industrial market is selling at a discount to fuel ethanol.  

Accordingly, which should not be a surprise to many, a round of increases have been announced for April 1, 2008.  However, due to a number of reasons, the support is fragmented. Archer Daniels Midland announced a 45 cpg price increase effective April 1, 2008.  LyondellBasell has also announced a 45 cpg increase effective April 1, 2008, for their domestic synthetic ethanol.  Sasol, with imported synthetic ethanol, in a per pound equivalent, announced a 7 cent per pound increase, which is slightly over 45 cpg, effective April 1, 2008. On the other hand, Grain Processing Corporation, announced a 20 cpg increase effective April 1, 2008, and announced a 15 cent per gallon increase effective July, 2008.  The July increase is subject to market conditions.  MGP Ingredients announced a 20 cpg increase effective April 1, 2008.  Vertical, with imported Brazilian cane ethanol, announced a 25 cpg increase effective April 1, 2008. Commercial Alcohol, with imported Canadian corn fermentation ethanol and European synthetic has also announced a 45 cpg price increase effective April 1, 2008 . However, the fact is that much of the market is contractually obligated to maintain current prices through Q2 2008.  So, many contract customers have price protection through June 2008.  Therefore, they will not see an increase April 1, 2008. Non contract, incremental and any new or spot business will realize the full potential of the respective price increase announcements.  Costs have increased, demand is strong and inventories are balanced to tight.

Also, the fact is that much of the industrial market is selling at a discount to fuel ethanol, which is crazy.  Industrial ethanol requires additional investment on the back end for additional extractive distillation, rectification and finishing.  This can be done with two, or perhaps three additional columns.  With extractive distillation, water and steam is added to high proof ethanol.  This allows for the removal of oils and impurities in the column.  Dilute ethanol is removed the bottom of the tower and then fed to a rectifier, and proof increased back up to approximately 190.  The final distillation process removes additional impurities and odors. Industrial ethanol specifications are very tight and production must be consistent.  Generally speaking, industrial ethanol pricing is more stable, compared to fuel ethanol.  Although, the prices do not reach the spikes experienced with fuel ethanol during periods of high demand and low inventory, the market prices do not reach the troughs experienced during periods of over supply.  Volume agreements are normally contracted for the calendar year, and prices commonly have quarterly price protection, and this year six month price protection was not uncommon.

Both industrial and fuel fermentation ethanol start from the same source, typical corn dry milling process or wet milling process.  The differentiation between the products is due to the amount of capital spent on the back end for processing the ethanol, for the additional distillation and rectification of the ethanol to remove impurities and odor, storage/inventory capability, terminals and denaturing.  Additionally, the administrative cost for the production, handling and sale of industrial ethanol is significantly higher than fuel ethanol. A fuel ethanol producer/marketer may have one manager selling 500 million gallons.  Meanwhile, an industrial ethanol marketer may have a sales staff of five to sell 35 million gallons, with customer service, quality control and shipping.  Many industrial ethanol customers receive their product in tank truck quantities.  Most users have limited storage capability, so they require "just-in-time" shipments, which means that will need a specific volume delivered on a specific date, and at a specific time.  It is difficult, and costly, to manage an industrial ethanol business, especially compared to fuel ethanol.  All of this, including denaturants, adds up to at least 35 cpg of addition cost compared to fuel ethanol. The United States industrial market demand is approximately 270 million gallons in 2007.  The market demand is segregated into solvent and chemical intermediate usage.  Solvent demand in 2007 totaled 165 million gallons (61% of the industrial market demand), and chemical intermediate demand totaled 165 million gallons (39% of the industrial market demand).  Beverage ethanol is approximately 65 million gallons, which includes exports.      Growth rates are flat to 2% per year.  Compared to the fuel ethanol, the annual demand is quite small, representing less than 4% of the entire ethanol market.

 

 

 

Basell AF and Lyondell Chemical Company today completed their merger, creating LyondellBasell Industries, the world's third-largest independent chemical company. The company operates a 50 million gallon synthetic ethanol plant in Tuscol.a, Illinois, USA

Ladd Seaberg announced today that he plans to step down as chief executive officer of MGP Ingredients, Inc. (Nasdaq/MGPI) effective June 30, 2008, but will continue as chairman of the company’s board of directors after that date. He simultaneously announced that he will be succeeded as ceo by Tim Newkirk, current president and chief operating officer of the company...more

The ChemPro Group, LLC, a full-service design-build company specializing in modular process solutions, prefabricated assemblies, and project management, announced that the company has contracted with Golden Triangle Energy of Craig, MO, to design and build a modular distillation dehydration plant for the production of high-quality ethanol from corn-based fermentation feedstock. According to Steve Lavorerio, President of ChemPro, the project is in progress, with equipment fabrication and site preparation underway...more

Important News - Notice from Grain Processing Corporation (GPC) regarding removal of brucine sulfate from GPC denaturant program - April 1, 2007 Brucine sulfate has posed a denaturant dilemma for GPC since 1988 when we learned that producers in India, the only place we know that produces this product, extended weak brucine sulfate supplies by adding strychnine at over 100 ppm. Brucine alkaloid and brucine sulfate are class B poisons and although authorized by the TTB for use in making SDA 40-1 and 40-2, personal products containing even trace amounts of a class B poison are questionable at best. GPC has two issues with handling brucine sulfate. There is a distinct safety issue to our employees in working with this product. We do not feel that we can continue to put our personnel at risk in handling a poison as a denaturant. We made a similar decision 15 years ago when we discontinued handling nicotine for SDA 4 manufacture. Secondly, the quality control for brucine alkaloid and its resulting sulfate salt has been very inconsistent. The solubility parameter has varied greatly in alcohol.
This solubility parameter is more critical in colder weather. We no longer wish to deal with an inconsistent quality product as a denaturant for our quality alcohol. Since GPC makes a significant effort to consistently produce the highest quality alcohol for our customer’s use, then why would we wish to stake our hard earned quality reputation on a highly variable denaturant, especially when it’s a class B poison? Since there is an excellent proven alternative to brucine sulfate already being used in the marketplace with success (Bitrex-denatonium benzoate, ie. SDA 40B), we have made the decision to no longer denature with brucine sulfate or brucine alkaloid effective January 1, 2008. Hopefully this notice will give our customers sufficient time to evaluate alternative formulations to SDA 40-1 and
40-2. Should you have further questions, please contact your GPC sales representative.
_______________________________________________________________

Industrial ethanol is a mature market.  However, due to the rapid growth in fuel ethanol, the market dynamics are actively changing.  Key suppliers in this market include domestic and imported fermentation producers, as well as domestic and imported synthetic producers.  A market analysis is available to subscribers, covering market segments, supply, demand, pricing and key market influences.  Additional details and analysis are covered in depth by subscription in the Ethanol Market Weekly News and Market Report, breaking news, and market supplemental summaries.  Coverage includes current and historical prices, production and demand, with comparitive analysis and forecasting. For further detail and analysis, please subscribe to the EthanolMarket.com,



Ethanol/Biofuels Weekly News and Market Report

Alcohol and Tobacco Tax and Trade Burea (TTB)

 

 

  

Subscribe to the Ethanol Market
Weekly News and Market Report for full details

 

05.01.07 - Notice from Grain Processing Corporation (GPC) regarding removal of brucine sulfate from GPC denaturant program - April 1, 2007 Brucine sulfate has posed a denaturant dilemma for GPC since 1988 when we learned that producers in India, the only place we know that produces this product, extended weak brucine sulfate supplies by adding strychnine at over 100 ppm. Brucine alkaloid and brucine sulfate are class B poisons and although authorized by the TTB for use in making SDA 40-1 and 40-2, personal products containing even trace amounts of a class B poison are questionable at best. GPC has two issues with handling brucine sulfate. There is a distinct safety issue to our employees in working with this product. We do not feel that we can continue to put our personnel at risk in handling a poison as a denaturant. We made a similar decision 15 years ago when we discontinued handling nicotine for SDA 4 manufacture. Secondly, the quality control for brucine alkaloid and its resulting sulfate salt has been very inconsistent. The solubility parameter has varied greatly in alcohol. This solubility parameter is more critical in colder weather. We no longer wish to deal with an inconsistent quality product as a denaturant for our quality alcohol. Since GPC makes a significant effort to consistently produce the highest quality alcohol for our customer’s use, then why would we wish to stake our hard earned quality reputation on a highly variable denaturant, especially when it’s a class B poison? Since there is an excellent proven alternative to brucine sulfate already being used in the marketplace with success (Bitrex-denatonium benzoate, ie. SDA 40B), we have made the decision to no longer denature with brucine sulfate or brucine alkaloid effective January 1, 2008. Hopefully this notice will give our customers sufficient time to evaluate alternative formulations to SDA 40-1 and 40-2. Should you have further questions, please contact your GPC sales representative.

04.10.07 - The April 1, 2007, industrial ethanol market $.15 per gallon price increase was firm and fully effective. For more details, subscribe to the Ethanol Market Weekly News and Market Report.

02.28.07 - There have not been any announcements, but based on our analysis of the fundamentals, the industrial ethanol market may be poised for another round of increases April 1, 2007.  The market continues to experience strong demand, and tight inventories.  Although, in this case, $4.25 to $4.50 corn may be pushing producers to recoup some of the significant and very real cost increases.   Q1 2007 price offers were extended with significantly lower corn prices.  The major fermentation players in the United States industrial market are ADM, Grain Processing and Midwest Grain Products Ingredients, and Commercial Alcohol supplies product from Canada.  Higher prices may encourage increased Brazilian imports. Regardless, prices will need to increase to capture lost margin and to compete with other derivative values, mainly starch, and frankly, to compete with corn as corn, as opposed to fermenting into ethanol. For a full industrial ethanol market review, subscribe to the Ethanol Market Weekly News and Market Report, the Premier Ethanol Industry Newsletter, Web News and Consulting Source.      

01.23.07 - The January 1, 2007, 15 cent per gallon industrial ethanol market price increase was fully implemented in the United States. The overall supply and demand balances remain tight.

12.08.06 - Looks like all major participants in the United States Industrial Ethanol Market have announced a 15 cent per gallon price increase effective January 1, 2007. Please subscribe to the Ethanol Market Weekly News and Market Report for full details.

11.21.06 - The industrial ethanol market is poised for an increase January 1, 2007.  The industrial market traded at the foot of the booming fuel ethanol market this summer, with prices only moving up fractionally compared to fuel ethanol.  Live by the sword and die by the sword!  The industrial marketers are too smart to base prices on the vagaries, moods and swings in the fuel ethanol market.  Over time, industrial prices tend to have lower peaks and higher valleys, which results in stability.  However, during the past 18 months, industrial prices have had a hard time bringing up the bottom of the market up to appropriate premiums above the fuel ethanol market, and even some mid sized business margins were not appropriate.  The Ethanol Market industrial ethanol premium required to cover the additional cost is 40 cpg.  The additional cost includes capital cost for the initial investment, higher energy required for the extra distillation, rectification and dehydration, denaturants, denaturing, transportation, terminal and sales and administrative cost, and the Harvard Business School term, the hassle factor.  Industrial business is hard work. Without the 40 cpg premium, which should be baseline target across the entire portfolio, sales into the industrial market is more of a revenue chaser, not margin enhancement.  Frankly, on a straight margin basis, the industrial market should be short right now.  However, you can’t jump in and out the industrial market, and if you do the penalty can be severe. 

Grain Processing Corporation has announced to their customers a 15 cpg industrial price increase effective January 1, 2006.  Other fermentation producers, including Midwest Grain Products Ingredients, Commercial Alcohols and Archer Daniels Midland, are expected to follow, supported by very strong demand, low inventory and a very real cost push from the skyrocketing corn market.   The synthetic boys never recovered the margins from the exploding ethylene prices earlier in the summer, and Lyondell and Sasol are also struggling with inventory.  Lyondell just came out of an unscheduled 5 day outage due to an ethylene interruption, and this is on the heels of a scheduled 35 day plant outage late summer.  Product is indeed tight.  Short may not be the correct term, but the industrial pipeline really can’t handle any more burps. 

Unfortunately, or fortunately from the buyers perspective, several big league deals were cut before the corn explosion, and before the recent surge in fuel ethanol prices.  We were surprised when the news hit the street.  Perhaps too much weight was put on the fuel ethanol supply side later in 2007.   However, those deals in all probability are a “that was then and this now” scenario, and marketers are expected to pull in the reigns and be a lot more conservative with price and price protection.  The 15 cpg January 1, 2007, price increase will be firm.  Corn prices are now trading in the $3.60 range.  This is a far cry from the 1.60 cash prices earlier in the summer.  Corn is the big question mark. With the volatility of this market, fermentation producers will reluctant to get caught in a margin squeeze.   At 2.8 gallons per bushel of corn, there is over 35 cpg of cost increase from $2.50 bushel to $3.50 per bushel.  At $3.50 per bushel, there is over $1.25 per gallon of gross corn cost per gallon ethanol.  The squeeze is on, and the fundamentals are not expected to improve any time soon, especially with respect to corn. Actually, December corn closed at $3.60 per bushel on Monday November 20, 2006. Hang on to your hats, because it is going to be a wild ride in 2007!

COMMERCIAL ALCOHOLS BECOMES GREENFIELD ETHANOL
10.02.06 - TORONTO: Commercial Alcohols Inc, Canada’s leading ethanol producer, has taken on a new name to reflect its fast-growing ethanol production business. The new name is GreenField Ethanol Inc., to illustrate the growing importance of its ethanol business. The company, which still has a substantial beverage and industrial alcohol production business, began from a standing start in 1989 as Commercial Alcohols and has grown to be Canada’s leading fuel and packaged alcohol producer. Through leadership and ingenuity, GreenField has forged a business model over the past 18 years that sets it apart from an industry that is focused almost exclusively on the construction of one-off fuel plants. “GreenField Ethanol is committed to being a leader in the development of world-class ethanol production facilities,” said President and CEO Bob Gallant.“This company is poised to take advantage of the rapid growth in the fuel ethanol marketplace by practicing what it preaches – disciplined management, creative thinking and an unending drive to do better.” GreenField has three world-class ethanol-manufacturing facilities and two new facilities under development. The plants are located in Chatham and Tiverton, Ontario and a new facility will open in early spring of 2007 in Varennes, Quebec. Construction on two 200-million litre per year plants, in Johnstown and Hensall, Ontario, is slated to begin shortly.GreenField’s expansion plans show that ethanol production is projected to grow to more than 700 million litres per year by 2008 making GreenField one of the top producers in North America.  “GreenField has experience in building several successful ethanol plants in Canada and is committed to remaining at the forefront of biofuels production technology in the future,” said Gallant.The Canadian government has committed to require 5 per cent average renewable content in Canadian gasoline and diesel fuel, such as ethanol and biodiesel, by 2010.  GreenField’s industrial and beverage alcohol subsidiaries continue to grow and increase market share adding a dimension to the company that provides stability and sustainable earnings. For more information about industrial and beverage alcohol please visit www.comalc.com. They will remain active under the name Commercial Alcohols. GreenField Ethanol can be found at more than 400 Sunoco gas stations across Ontario.  The ethanol added this gasoline has reduced greenhouse gas emissions by more than one million tons since 1997. CAI’s long-term partnership with Suncor (Sunoco) was the first major contract between an ethanol supplier and a major oil company in Canada and it paved the way for the renewable fuels industry in this country. The company’s name change is effective immediately. 

06.28.06 - As reviewed last week, Industrial ethanol marketers announced a July 1, 2006, price increase.   We reported that both Archer Daniels Midland and Lyondell/Equistar announced a 25 cpg increase and Grain Processing Corporation announced 15 cpg.  Now on board is Commercial Alcohols with a 25 cpg increase for both synthetic and fermentation ethanol, MGP Ingredients announced 15 cpg and Sasol  announced 4 cents per pound (26.44 cpg) for anhydrous and 3.8 (25.82 cpg) cents per pound for 190 proof formulations.  The other marketers, Alcochem and Vertical will move with the market.
     Also, as discussed last week, the disparity is apparently linked to the April 1, 2006, industrial ethanol market increase, where all marketers, with the exception of Archer Daniels Midland, announced a price increase.  Some companies pushed the increase through, while others chose to stay competitive with Archer Daniels Midland.  They had offered six month price protection to many of their major customers in 2005 negotiations for 2006 business, so, they are in essence playing “catch-up” with the industry.
     It looks like the plan is to get prices up 25 to 30 cpg above the January 2006 price, either is steps (April and July) or all at once in July.
    We (Ethanol Market) have been surprised that level of the recent industrial market increases have not even been close to the fuel ethanol movements, as industrial ethanol will still be selling at a discount to fuel ethanol in many cases, and the market fundamentals strongly support a more significant price move.  We have the industrial market upgrade cost at 35 cpg, which includes additional distillation and rectification, higher quality, moisture and odor specifications, denaturants and denaturing, terminal cost, sales marketing and administrative cost, not to mention higher distribution cost.  With spot fuel ethanol trading over 400 cpg, it is very difficult to “just say no” with any excess anhydrous inventory.  Accordingly, industrial anhydrous inventory will be tight for the rest of the summer.  Perhaps the market wants to stay somewhat sane, and not encourage any non-traditional gallons from entering the market.  Also, the marketers have always tried to distance themselves from any direct correlation to the fuel ethanol market.  Either way, industrial ethanol is a bargain.
     Lyondell/Equistar is still planning on total Tuscola, Illinois, ethanol plant outage in late July.  The primary reason for the 30 to 35 day outage is a scheduled and planned inspection and maintenance of the ethylene pipeline.  The 120 mile pipeline supplies ethylene from the company’s 1.2 billion pound ethylene cracker in Morris, Illinois.  The company will changeout the catalyst in one of their two trains, and scheduled general plant maintenance in Tuscola, Illinois.   The industry is already suffering from very low inventory, and 30 to 35 day outage with a major player in the market will only exacerbate the situation.    

 06.07.06 - .Industrial ethanol marketers announced a July 1, 2006, price increase.  As expected, several industrial ethanol producers have announced a price increase effective July 1, 2006.  Both Archer Daniels Midland and Lyondell/Equistar announced a 25 cpg increase and Grain Processing Corporation announced 15 cpg.  The disparity is apparently linked to the April 1, 2006, industrial ethanol market increase, where all marketers, with the exception of Archer Daniels Midland, announced a price increase.  Some companies pushed the increase through, while others chose to stay competitive with Archer Daniels Midland.  They had offered six month price protection to many of their major customers in 2005 negotiations for 2006 business, so, they are in essence playing "catch-up" with the industry.  No word at press time regarding Sasol, Commercial Alcohol and MGP Ingredients.  However, we (Ethanol Market) are quite surprised at the level of the increase, as industrial ethanol, on a net basis, will still be selling at a discount to fuel ethanol in many cases. We have the industrial market upgrade cost at 35 cpg, which includes additional distillation and rectification, higher quality, moisture and odor specifications, denaturants and denaturing, terminal cost, sales marketing and administrative cost, not to mention higher distribution cost. Many industrial contracts are negotiated on a "delivered" basis, freight pre-paid and allowed.  Pre-paid and allowed contractual freight may not be a good idea, as freight surcharges are not passed through to the buyer, and any increases results in a lower net price to the marketer.  Perhaps now is the time that the industry will consider an FOB producing  plant pricing approach to the marketplace.  This has always been a difficult concept, with the multiple shipping locations (Midwest, East Coast, Houston) and multiple sources of origin (United States fermentation and synthetic, United Kingdom ethylene synthetic, South African coal gasification  ynthetic, Brazilian cane fermentation, and Canadian corn fermentation.

GREEN POWER, WLL
     Bahrain synthetic ethanol
05.15.06

Mr. Ismail Malla, Managing Director of Green Power, WLL, has advised Ethanol Market that they plan on commissioning their industrial ethanol facility in Bahrain on June 25, 2006.  Green Power, WLL, from the Kingdom of Bahrain, had previously awarded Vogelbusch with the supply of a skid mounted mol sieve dehydration unit, with a 120,000 ton annual capacity, which is in the 40 million gallon range.  The plant is designed to process crude industrial ethanol (CIE) from the SADF facility in Al Jubail, Saudi Arabia, and will offer anhydrous and 96% grades.  Green Power is currently exploring sales opportunities throughout the world.   Saudi Arabia Petrochemical Company (SADAF) is a 50%/50% joint venture with Shell Chemicals and Saudi Basic Industries (SABIC).  The joint venture, based in Al Jubail, Saudi Aabia, produces ethylene, styrene, MTBE, caustic soda and crude industrial ethanol  (CIE).  The CIE capacity is 300,000 metric tons per year (100 million gallons).  A significant portion of the CIE was originally marketed in the United States by Shell Chemical.  This volume began to decrease, and the CIE was eventually marketed by Union Carbide.  Dow purchased Union Carbide.  Several years ago, Archer Daniels Midland Company (ADM) and The Dow Chemical Company (Dow) announced that effective January 1, 2005, ADM would acquire the interest of Union Carbide Corporation (UCC) in World Ethanol, a joint venture between ADM and UCC.  UCC is a wholly-owned subsidiary of Dow. The agreement called for ADM and UCC to continue marketing industrial ethanol through World Ethanol during a two-year transition period.  At the end of the two year transition period, Dow exited the industrial ethanol business.

05.08.06 - The United States Industrial ethanol market will continue face significant hurdles for the balance of the year.  The obvious and real challenge concerns supply with regard to a rather strong and more profitable demand pull from the fuel ethanol market.  Anhydrous ethanol can go out the door at into the fuel ethanol market the 250's and 260's FOB producing plant.  This is higher than most net prices in the industrial market, not even including the Ethanol Market 35 cent per gallon upgrade cost for additional distillation, rectification, dehydration, denaturant, denaturing, terminal, transportation and administrative cost.
     Additionally, Brazilian players continue to be under pressure with high prices and demand in Brazil, and now the decreasing exchange rate.  The exchange rate is now down to 2.07 (one US $ equals 2.07 Real).  In early January 2006, one US $ equaled 2.35 Real.  So, due to recent  decreased demand, pricing has softened a bit in Brazil, but the decreasing exchange rate has increased the cost for export to the United States.  This is a very real economic challenge for PFM (Coimex), Vertical and Alcochem.  Futhermore, Sasol appears to be reducing imports into the United States as well.  Also, we are starting to receive confirmations from the industrial market consumers that Equistar/Lyondell has advised them of a 30 to 35 day full plant outage in August, for a scheduled  ethylene pipeline maintenance and inspection.  Equistar receives ethylene, via a 120 mile pipeline from its Morris, Illinois, ethylene and polyethylene production facility.  Polymers have been providing higher margins, so ethanol production has been at reduced rates for the past six months, further
 tightening supply/demand balances.  Equistar just recently competed a catalyst changeout on one of its two ethanol trains.  The combination of reduced imports, higher alternative values, and reduced production will challenge the industrial market for the balance of the year.  We will follow this closely.

Market Update - March 28 2006 -  Almost all producers are on board for a round of increases scheduled for April 1, 2006.  In many cases, the industrial market has been selling at a discount to fuel ethanol during the five months, especially when adding in the extra cost associated with distilling, rectifying, denaturing, denaturants, distribution and terminal fees.  The Ethanol Market reference upcharge for this is 35 cents per gallon, on a net basis.
     Producers on board for April 1, 2006 are:
 
Sasol  -  4 cents per pound (Synthetic)
GPC - 15 cpg (Fermentation)
MGPI - 15 cpg (Fermentation)
Lyondell - 25 cpg (Synthetic)
Commercial Alcohols - 15 cpg (Fermentation)
Commercial Alcohols - 25 cpg (Synthetic)
  
    As reported last week, Sasol is implementing a conversion from billing in gallons, to billing in pounds, as virtually all of the other products they sell/market are sold on a per pound basis.  The resulting conversion equals 26.44 cpg for 200 proof (anhydrous) formulations, and 27.90 cpg for 190 proof products.  They also set list price levels of 50 cents per pound for 200 proof, and 47 cents per pound for 190 proof formulations.  Additionally, they implemented an immediate 100% sales control allocation, and increased the minimum volumes, up to 1,000 gallons, for customer pick at their terminals in Carteret, NJ, and Wilmington, NC.
     Noticeably missing is Archer Daniel Midland (ADM), although there are ten days left in the month.  A survey of the customer base indicates that it was not uncommon for major buyers to have six month price protection, and ADM may have a large portion of their business under contract, with price protection through June 30, 2006. They may be waiting for the third quarter.
     Meanwhile, the market remains tight, with anhydrous balances quite tight.  The market influences supporting the increase will be in place for the rest of the year.  They are an inverted value to fuel ethanol, high sugar prices and pressure on Brazilian imports, low inventory and high demand.  Although natural gas prices have settled recently, futures prices this winter are near $11MMBtu.  

 

02.08.06 - Product is tight. Spot material is hard to come by.  The Fuel ethanol market continues to climb, and the gap between indsutrial and fuel ethanol is increasing.  Please subscribe to the Ethanol Market Weekly News and Market Report for full details

02.02.06 - Leandro Carboni, Business Manager, Solvent & C4 Specialties, with Lyndell Chemical, has announced that Brian Griffin has accepted the position of Marketing Manager, Brake Fluids and Ethanol.  Brian will be replacing Jim Thompson who, as previously announced, has accepted the position of Marketing Manager - Styrene & Aromatics.  Brian received a B.S. in Electrical Engineering from Mississippi State University and a MBA from the University of Houston.  Brian has recently been the Lead Business Consultant for EO/EG, C4, and Styrene but also brings a background in Supply and Operations Planning which will be valuable in the management of the business.  Lyondell owns and operates a 50 million gallon synthetic ethanol plant in Tuscola, Illinois.

01.19.06 - Here we go again!  The United States indsutrial ethanol market, in many cases, on a net basis, is selling at a discount to fuel ethanol.  For a full analysis, please subscribe to the Ethanol Market Weekly News and Market Report for full details.  The Ethanol Market industrial ethanol price premium is 35 cents per gallon, just to cover the increased production, denaturants, denaturing, distribution and marketing costs.   

01.07.06 - MGP Ingredients announced a price increase for 190 and 200 proof industrial ethanol formulations, effective January 1, 2006.  The other major market particiapants previously announced increases effective eteiher December 1, 2005 or January 1, 2006.  Please subscribe to the Ethanol Market Weekly News and Market Report for full details

11.30.05 - On October 1, 2005, Grain Processing Corporation announced an increase on all off-schedule prices for 190 and 200 proof pure and denatured ethyl alcohol formulations by $0.35 per gallon, not to exceed current list prices.  Also at that time, a $.15 per gallon temporary voluntary allowance (TVA) was placed in effect.  Effective January 1, 2006, GPC will remove the temporary voluntary allowance (TVA) of $.15 per gallon and raise all off-schedule prices for 190 proof pure and denatured ethyl alcohol formulations by an additional $.05 per gallon.  Thus in net affect, the prices for all off-schedule 190 proof pure and denatured ethyl alcohol formulations will rise by $.20 per gallon.  Also effective January 1, 2006, GPC will remove the temporary voluntary allowance (TVA) of $.15 per gallon and raise all off-schedule prices for anhydrous pure and denatured ethyl alcohol formulations by $.10 per gallon.  In net affect, GPC prices for all off-schedule anhydrous pure and denatured ethyl alcohol formulations will rise by $.25 per gallon.  The new list prices relect the $.25 per gallon differential between 190 proof and 200 proof (Anhydrous) formulations. 

11.15.05 - Strong demand and tight supplies will continue throughout the rest of Q4 2005, and into Q1/Q2 2006.  Anhydrous product is especially tight.

10.20.05 - a major industrial ethanol supplier is having some minor ethanol production difficulties, further straining an already tight supply/demand balance.  Anhydrous industrial ethanol inventory is very tight.  Most, if not all, industrial ethanol suppliers are on sales control.  Spot industrial ethanol is difficult to find. 

10.05.05 - $.20 to $.25 per gallon industrial ethanol price increase implemented, or as allowed by contract.  Supply/Demand balances are tight. 

09.18.05 - All major players are now on board for an October industrial ethanol price increase.  Subscribe to the EthanolMarket.com, Weekly News and Market Report, for full details and analysis.

09.05.05 - A major industrial ethanol producer has advised its customers that there will be an industrial ethanol market price increase effective October 1, 2005.  The company cited increased energy cost, particularly natural gas, increased denaturant cost and escalating transportation cost.  The company also announced an industrial ethanol market sales control plan.  For full details on this announcement, and other industrial ethanol market information, developing news and breaking information, please subscribe to the EthanolMarket.com, Weekly News and Market Report, which is published 52 weeks per year.   

08.30.05 - The exploding fuel ethanol market, combined with increased natural gas and transportation cost, will provide fundemental support for a significant industrial ethanol market price increase in the next 15 to 30 days.  Spot fuel ethanol, rack fuel ethanol and some contract prices are significantly higher than many industrial ethanol accounts.  Natural gas prices alone provide a frim cost push for industrial ethanol market prices.  Natural gas near month futures prices have been trading in the $10 to $11MMBtu range.  Please contact EthanolMarket.com, for more information regarding the North American Industrial Ethanol Market Multiclient Study

08.06.05 - Midwest Grain Products Ingredients (MGPI) announced today that its income for the fourth quarter of fiscal 2005, which ended June 30, will be lower than expected, and that earnings for the entire year likely will be between $0.24 and $0.26 per share. This compares to the company's most recently issued guidance of $0.35 to $0.40 per share.

According to Ladd Seaberg, president and chief executive officer, the company missed its guidance because the fourth quarter performance was adversely affected by a combination of factors, primarily higher energy costs, lower than anticipated fuel grade alcohol prices, lower than expected sales of specialty food ingredients and increased sales of lower valued commodity wheat gluten, which, due to market conditions, was sold below cost.

"The higher energy costs in the fourth quarter resulted from a higher than expected increase in natural gas prices," Seaberg said. "Also, the softness in fuel alcohol prices was more severe than what had been factored into our guidance, which we revised early in the quarter. Although natural gas prices have risen since the end of the quarter, selling prices for fuel alcohol have increased even more substantially and should contribute to an improved performance in the first quarter of fiscal 2006. Specialty ingredient sales are also showing signs of improvement and, as a result, the effect of sales in our commodity gluten area should be less of a factor in the current quarter."

Although the company has deemphasized gluten sales in recent years because of market conditions, gluten remains a co-product from the processing of flour in the manufacture of wheat starch. Seaberg explained, "we use gluten to make our specialty proteins. Because our sales of specialty proteins lagged behind our starch sales, we had excess gluten which we had to sell at market prices below our costs." Seaberg added that "one of our primary goals is to continue to strengthen our capabilities and develop new opportunities for converting as much gluten as feasible into innovative, value-added specialty protein ingredients. Despite what we experienced in the fourth quarter, we continue to make significant progress toward this goal."

As previously announced, the company plans to issue its fourth quarter and fiscal year-end results prior to the market's opening on August 16. Additional details about the quarter's performance will be included in the release and discussed in a conference call which the company has scheduled for 10 a.m. central time that day. Stockholders and other interested persons may listen to the conference call via telephone by dialing 800-322-0079 by 9:50 a.m. central time August 16.
 

07.07.05 - Industrial ethanol prices have settled after a recent round of decreases and adjustments.  Meanwhile, the fuel ethanol market surge has resulted in some industrial ethanol accounts with lower net prices than current spot and rack fuel ethanol prices. 

06.30.05 - The industrial market seems to be in a defensive mode, trying to maintain exposure with long time customers at comparably attractive numbers.  The problem, as we see it, is that the market was ripe for cherry picking and many new potential entrants were sniffing around for some low hanging fruit.  Well, as some movement developed in the industrial market, 5 to 10 cents, or more in some cases, or not at all in other cases, the fuel market started to move up.  The industrial market is indeed controlled by the supply and demand influences of high quality, consistent, low odor material, and not the fuel ethanol market dynamics.  Market moves will be monitored with more emphasis on net numbers.  The industrial market is typically sold on a delivered basis, freight pre-paid and allowed.  The industrial market adjustments may have been contract driven, and were negotiated many months ago, with the July kicker.  Also, the market may be seeking a common level, as the increases of late 2004 brought about a great deal of disparity, even at single accounts.  As they say in New York, this aberration was brought on by market dynamics, and we can expect a correction in the near future.   Additionally, it takes at least $.35 per gallon of extra cost throughout the entire system to supply and support industrial ethanol customers.  So, here we are, where many producers do not want to be, with some net fuel ethanol numbers coming in above net industrial ethanol prices, especially now with rack numbers prices in the 170's and low 180's.  What does this mean?  The market dynamics will reverse, and there will be strong fundamental support for an industrial ethanol market increase, perhaps October 1, 2005, or earlier.  

06.14.05 - The industrial ethanol market appears to be relatively balanced, with ample inventory to meet demand.  Some product substituion has occured, with ethanol replacing IPA.

05.23.05 - For a full industrial ethanol market analysis, please subscribe to the EthanolMarket.com, Weekly News and Market Report

04.09.05 -  The industrial ethanol market remains in balance, with demand holding strong.  Due to the wild ride last year, most of the volume is contracted for the year, and the spot market is relatively light.  As expected, the high prices have attracted some Brazilian imports, with at least three world traders establishing a foothold into the United States.  On the balance sheet, some of these gallons are replacing the BP reduction, the Aventine withdrawal, and a slight reduction in Lyondell gallons, and last year, some fermentation gallons that snuck into the fuel ethanol market.  Anhydrous gallons are still tight, with very little overhang available to soften thing up.  On the supply side, there has been some interesting activity during the past several months.  At least three Brazilian companies have established a presence in the United States.  Last year, industrial market prices were high in the United States, and the market was short.  This year, the market seems to be in balance, but the market in Brazil has changed.  Ethanol costs have increased, primarily due to the significant increase in Flex Fuel Vehicles (FFV), which can run on 100% ethanol, or 100% gasoline, or an ethanol/gasoline blend.  The wild popularity of the FFV in Brazil has been fueled by high crude and gasoline prices.  The consumer  has a choice in Brazil.  The choice is made at the pump.  With gasoline prices sky high, 100% ethanol has become a viable alternative, and both demand and prices have increased.  Over 50,000 FFV's were sold in March alone, nearly double the previous year and up from over 31,000 the previous month.  March 2005 FFV sales of over 50,000 units represented nearly 37% of vehicles sold.  In 2003, FFV's sales totaled 48,000 units, and then increased to 329,000 units in 2004.  As a result of the significant increase in demand, ethanol prices have increased, which may be pressuring exports to the United States.  Any forward pricing deals are probably under pressure.  Meanwhile, export demand to other parts of the world has been active.
     Also, industrial and beverage ethanol exports from the United States have been active.  Not a huge amount, but a consistent number of inquiries and shipments have been seen during the last several months, which is adding activity to anhydrous gallons.  Also, a fair amount of material has been going to the EU, and this may be reduced in the near future. Some these gallons had aggressively attacked the some of the industrial ethanol market.  Also, export demand to India is picking up, as a mandated ethanol program is drawing some high purity material into the fuel ethanol market.  These are not huge developments, but it is something we will watch over the summer. Also, product substitution, ethanol for IPA, is starting to occur, as the long run of high propylene and propylene derivative pricing continues.  As a result of these, and other market influences, the market could see some push from lower end, and some pull at the upper end as we move into summer.  Overall, the market will remain relatively in balance, as long as there is not significant interruptions or outages.  Increased exports could put pressure on supplies, especially anhydrous, as the year develops.  IPA substitution could be a factor.  The important thing to remember is that currently, the industrial ethanol market is controlled by the fundamentals in the industrial market, and any influence from the fuel ethanol market is more emotional, without fundamental support. 

03.15.05 - Industrial ethanol markets remain quite stable, and are not being directly influenced by the weak, over supplied fuel ethanol market.  The new fuel ethanol plants coming on stream, are 100% fuel ethanol, without capacity to upgrade to industrial market quality.

03.05.05 - Anhydrous supply remains tight.  Export  interest from the United States to Europe, seems to be picking up, especially for high quality material.

02.10.05 - Brazilian ethanol pushing into the United States ethanol market, drawn by high prices and tight supply/demand balances.  For a full review, please subcribe to the EthanolMarket.com, Weekly News and Market Report

01.27.05 - Procter & Gamble has signed an agreement to acquire 100% of The Gillette Company .  Gillette, headquartered in Boston, MA, was founded in 1901.
The leading brands for Gillette include Gillette razors and blades, Duracell Copper Top batteries, Oral-B toothbrushes, Braun shavers.  P & G will issue 0.975 shares of its common stock for each share of Gillette commons stock.  The transaction is valued at $57 billion (USD). P & G will acquire all of Gillette's business, including manufacturing, technical and research facilities.  Also, P & G will buy back $18 to $22 million of P & G's commons stock during the next 12 to 18 months. P & G expects to get revenue and cost synergies of $14 to $16 billion (USD), and they anticipate a reduction of 6,000 employees.  P & G is headquarted in Cincinnati, OH.

P & G is major consumer of industrial ethanol.  Although to a much lesser degree, Gillette also uses industrial ethanol.  For more information regarding  th
e  industrial ethanol marketplace, please contact info@ethanolmarket.com        

01.06.05 - "BP Chemicals, Ltd., through a newly established affiliate, has agreed to an exclusive multi-year arrangement with Commercial Alcohols Pharmco subsidary, to be their exclusive agent in the United States for BP's synthetic ethanol. Pharmco will balance the supply and demand accordingly and only commit a certain percentage of the material available to those who want or need synthetic alcohol. Pharmco's unique position in the Northeast USA market and the facility at the Kinder Morgan terminal will be used to accomplish this stated goal and objective", stated Gary McInerney, VP with Commercial Alcohols.   BP owns and operates a DSP at the Kinder Morgan terminal, and produces synthetic ethanol in Grangemouth, Scotland.  BP recently spun of their Olefins and Derivatives business, which include the ethanol business.  The new company will be 75% owned by BP, and they will probably IPO the remaining 25%. 

12.10.04 - Several industrial ethanol market producers have announced ethanol price increases ranging from $.15 to $.25 per gallon effective January 1, 2005.  The market still remains is short supply.  High prices and short supply will support the ethanol market fundamentals supporting non-traditional ethanol imports, mainly Brazil.  Current industrial ethanol market prices are exceeding the EthanolMarket.com Price Watch analysis, confirming tightness in the ethanol marketplace.  For a full industrial market analysis, please subscribe to the EthanolMarket.com, Weekly News and Market Report.

12.08.04 - Lyondell completed the acquisition of Millennium Chemical on December 1, 2004.  Millennium previously owned a share in Equistar Chemical, which operates a 50 million gallon synthetic ethanol facility in Tuscola, Illinois.  Lyondell, through it's Equistar division, now fully controls the synthetic ethanol facility.  The plant is supplied with ethylene via pipeline supplied by a Lyondell ethylene facility in Morris, Illinois.  At this time, linear low density polyethylene, fueled by the low dollar and high export demand, is providing strong derivative competition for the ethylene pounds.  The Tuscola synthetic ethanol plant is the only synthetic ethanol facility in North America.

12.07.04 - Some minor supply disruption is expected from the recent ADM decision to consolidate their indsutrial ethanol distributor program.  The problem is that replacement gallons are hard to find.

12.02.04 - Archer Daniels Midland (ADM) has announced the the structure of the new industrial ethanol Distributor Partner program.  ADM is consolidating the previous Dow and ADM ethanol distributor relationships, and implementing a smaller, more manageable ethanol distributor program, with increased efficiencies and effectiveness.  The new program will be effective January 1, 2005.  Meanwhile, ADM will honor the previous Dow supply agreements through December 31. 2004.  ADM has appointed two National Distributors and six Regional Distributors.  Please subscribe to the EthanolMarket.com, Weekly News and Market Report for full details.

11.17.04 - The Tereos group, has aquired, through it BENP ( Bio-Ethanol Nord Picardie ) subsidiary, SODES, in Lillebonne (Normandy), France.  SODES has annual sales of approximatley $75 million euros, and employs about 100 people. The synthetic ethanol facility uses the indirect hydration process to produce ethanol.  The company plans on expanding production at the site, with a wheat processing bio-ethanol facility, with plans to produce over 3.0 million hectoliters of ethanol by 2007.

11.15.04 - Major  industrial ethanol producer has an ethanol price increase posted for December 1, 2004.  For full market analysis, please...Subscribe

11.07.04 - Industrial ethanol price attracting non-traditional imports.  Industrial ethanol imports are expected to...Subscribe

11.02.04 - Industrial ethanol prices continue to increase.  Major player delays November 1, 2004 ethanol price increase to December 1, 2004.  Many contracts expire December 31, 2004.  Accordingly, many buyers are going to be hit with significant ethanol price increases for January 1, 2005.  Please subscribe to the the EthanolMarket.com, Weekly News and Market Report for full details.

10.28.04 - Virtually all industrial ethanol market suppliers have some form of sales control in place.

10.23.04 - Major industrial ethanol market producers remains on force majuere.

10.17.04 - Industrial ethanol market supplier enforces 75% sales control.

10.15.04 - A major ethanol market producer has announced an industrial ethanol price increase for November 1, 2004.  The increase continues the trend of  "off quarter" ethanol prices increases.  The industrial ethanol market has a long history of quarterly price protection, with extended caps and protection.  This is about to change.  Please subscribe to the EthanolMarket.com, Weekly News and Market Report for a full ethanol industry analysis...Subscribe

.10.05.04 - The British Petroleum ( BP) spin-off of the Olefins and Derivatives(O & D Division) business is on track for 01.01.05  The O & D Business includes the Synthetic Ethanol business, with ethyl alcohol production in Grangemouth, Scotland.   Full details available in the EthanolMarket.com newsletter.  

9.24.04 - Industrial ethanol price increase, supported by fermentation ethanol and synthetic ethanol producers, is solid for 10.1.04  The announced increases range between....Subscribe

9.16.04 - Another round of significant Industrial ethanol price increases scheduled for October 1, 2004.  Please subscribe to the EthanolMarket.com newsletter for full details and analysis.

09.01.04 - Sasol experienced an explosion and fire at the Secunda Polymers ethylene plant.  The ethylene plant is part of the chemicals production unit.  Unfortunately, Sasol regretted to announce that there were five fatalitities.  Sasol extends their deepest condolences to the families of the deceased and injured. 
For more details, please subscribe to the EthanolMarket.com newsletter.

09.01.04 - A major Industrial ethanol producer declared force majeure early this week.  The market impact will be significant in the short term.  Industrial supply has been tight, and demand strong throughout the summer.  Subscribe to the EthanolMarket.com newsletter for details.  Meanwhile, another supplier continues to suffer from severe inventory displacement and remains on allocation.

8.28.04 - The Board of Directors of MGP Ingredients, Inc. (Nasdaq/MGPI) yesterday declared a dividend of fifteen cents ($0.15) per share on the company's common stock.  The dividend is payable on November 4, 2004 to stockholders of record as of October 7, 2004. ..full Press Release

08.27.04 - Spot Industrial ethanol material is scarce, and prices continue to increase.   

08.23.04 - August 15th Industrial ethanol $.15 per gallon price increase passed through fully, or as allowed by contracts.  Spot markets, if material is available, is well above the $2.00 range.

08.17.04 - Major Industrial ethanol synthetic producer still managing inventory concerns.

08.03.04 - Major Industrial ethanol producer remains on 50% allocation due to...More

08.03.04 - For a full market review of the industrial and beverage ethanol markets, please subscribe to the EthanolMarket.com newsletter. 

07.27.04 - Major industrial ethanol producer gearing up for a routine scheduled turnaround in August...More

07.15.04 - Prepare for round three.  After Q2 and Q3 announcements, Industrial ethanol producers are gearing up for an August increase.  Inventories remain low...More

07.02.04 - Industrial ethanol price increase passed through without problems...More

06. 15.04 - The industrial ethanol price increase is firm.  Virtually all producers have announced an increase of...More

06.02.04 - All Industrial ethanol producers are supporting the recent price increase announcements.  The increases range from...More 

06.01.04 - Industrial ethanol inventory levels continue to tighten.  The market impact...More

05.28.04 - Producers have announced significant Industrial ethanol price increases.  Several producers have stated...More

05.24.04 - A major producer has announced strict sales control for Industrial ethanol.  The market dynamics fully support this position.  The Industrial ethanol market pricing has been lagging behind Fuel ethanol.  The gap...More   

05.23.04 - Market fundementals support significant price increases in the industrial ethanol market.  Coming off a $.20 per gallon announcement for April, prices could increase by as much as..More

05.21.04 - Industrial ethanol inventory concerns are real...More

05.17.04 - The price gap between fuel ethanol and industrial ethanol continues to expand.  Historically, industrial ethanol markets supported a premium...More

05.13.04 - Spot Industrial and beverage ethanol prices are increasing, and a general market announcement for July is expected.  The increase is expected to be...More

05.07.04 - Feedstocks are driving a cost push, combined with a rather strong market demand pull, Industrial and Beverage ethanol prices are expected to jump significantly...More

04.28.04 - Additional Industrial ethanol price increases expected...More

04.26.04 - Industrial ethanol supply is stressed...More

04.14.04 - Increasing fuel ethanol prices continue to apply pressure to the industrial market.  In many cases, fuel ethanol is selling at a premium to industrial ethanol.  Market dynamics are pressuring...More   

04.01.04 - Industrial ethanol prices increase.  The price increase realized...More 

Lyondell(LYO) and Millennium Chemicals(MCH) announce agreement to combine, a stock for stock business combination.  Lyondell, through its Equistar Chemicals limited partnership, owns and operates a synthetic ethanol facility in Tuscola, Illinois.  The ethanol plant has a capacity of...More

 

 

 






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