Valero idles 2 plants; US production down 12 percent in Oct.

By Susanne Retka Schill | November 01, 2012

Valero Renewables has once again idled two of its 10 ethanol plants due to tight margins. The two 120 MMgy plants at Albion, Neb., and Linden, Ind., were idled earlier in the summer, restarted in September and have recently been idled again. Bill Day, executive director of media relations for Valero Energy Corp., explained in September that local conditions made tight margins worse, namely higher-than-average basis and higher shipment costs due to poor rail access. As in the earlier case, Day said, “during this current shutdown all employees have remained on the job and on the payroll. Operations will resume at both plants once margins return to a level that makes production feasible.”

While some plants have been temporarily idled, others have slowed down production levels in response to the tight margins. Darrel Good, agricultural economist at University of Illinois, reviewed the weekly production estimates from the U.S. Energy Information Administration in his weekly outlook issued Oct. 29. “Ethanol production during the first seven weeks of the marketing year was eight percent less than during the same period last year,” he said and for the two weeks ended, Oct. 19, production was down 12 percent from that of last year. 

“The year-over-year reductions are likely to continue to be large, at least through the end of the calendar year,” Good continued. “Last year, ethanol production accelerated in November and December in anticipation of the expiration of the blender’s tax credit on December 31, 2011.  However, the current weekly pace is sufficient for corn consumption for ethanol and by-product consumption to reach 4.5 billion bushels for the year.”