U.S. ethanol exports for January second highest on record

By Holly Jessen | March 18, 2011

Viewed alone, the export numbers for U.S. ethanol in January are pretty impressive. Total ethanol, including denatured and undenatured, non-beverage, exports reached 57.2 million gallons in January—the second highest monthly total on record. “U.S. corn-based ethanol is still the lowest cost option on the world market today, and that’s likely to continue for the foreseeable future,” said Geoff Cooper, vice president of research and analysis for the Renewable Fuels Association.

What was exported in January, however, pales in comparison to what was exported the month before. In December an all-time record of 71.9 million gallons of ethanol left the U.S. bound for other countries, according to government data released March 10. In fact, all of 2010 was one for the record books, with 397 million gallons of U.S. ethanol exported in all—a nearly 400 percent increase in U.S. ethanol exports compared to the year before.

Although it’s still early, Cooper expects the trend to continue this year. “It’s hard to project what will happen exactly with ethanol exports in 2011, but we generally expect exports to remain strong in 2011,” he said. “It seems highly unlikely that we’d export any less product in 2011 than we did in 2010.”

A total of 45.4 million gallons exported in January were denatured, with 19.4 million gallons of that going to Canada. Other top destinations were the United Arab Emirates, the Netherlands, Finland, and the United Kingdom, respectively. These top five importers brought in 98 percent of the total U.S. denatured ethanol shipments in January.

 On the undenatured ethanol side, a total of 11.8 million gallons were exported in January. Half that went to Nigeria, with the Netherlands and Mexico taking the No. 2 and No. 3 spots. The three countries took in 97 percent of the undendatured ethanol exports in January.

Notably, exports to Brazil in 2010 were up about three times more than the total amount exported to Brazil in the previous 12 years combined. In all, Brazil took in 22.6 million gallons of U.S. ethanol in 2010 compared to the 7.8 million gallons imported from 1998 to 2009. “Brazil has actually increased its imports of U.S. ethanol in the first several months of 2011 and is on pace to import quite a bit more U.S. product in 2011 than it did in 2010,” he said. “Brazil’s ethanol production and exports typically peak in the July-September timeframe, so we’ll have a better idea at that time how much ethanol they will have available for export. So far, all indications are that Brazil is going to need most of the ethanol it produces this year just to meet its own domestic demands.”

One issue that came up in recent months is whether U.S. ethanol is being blended with gas, benefiting from the 45 cent blender’s credit, or the Volumetric Ethanol Excise Tax, and then being exported to other countries. While it hasn’t reached the formal investigation stage, ePURE, the European Producers Union of Renewable Ethanol, is examining U.S. trade practices for exporting U.S. ethanol to the EU to see if this is happening.

RFA agrees that ethanol exports shouldn’t benefit from the 45 cent tax credit, as that’s not the intent of the program, Cooper said. The numbers reported by the U.S. Department of Commerce and USDA, which is what the RFA tracks monthly, include denatured and undenatured ethanol that is not blended with gasoline and not eligible for the blender’s credit. “No one has shown us any clear evidence that there is a substantial amount of ethanol going to the EU that has benefited from VEETC,” he said. “There may be some marketers out there who may be blending a bit of gasoline into the ethanol to get access to VEETC, but there is no trade data available from the U.S. government or European governments—as far as I know—that would clarify to what extent this may be happening.”

In addition, the European tariff schedule actually encourages importation of E90 because the tariff rate on the blend is substantially lower than denatured fuel ethanol, he added. Rob Vierhout, secretary general of ePURE, told EPM previously that in some EU countries, E90 is classified as a chemical rather than ethanol, which does give it an edge financially, with reduced import duties. This is a procedural issue, he said, and the rules need to be rewritten with greater clarity so that ethanol is not classified as a chemical.