Few of the countries with high ethanol production and global export include Brazil, Peru, India, Canada, Nigeria, and the UAE. These countries have successfully and aggressively increased their global presence in the ethanol market in the past few years and have impacted the ethanol price forecast. In spite of stringent government tariffs, China has emerged as an important ethanol manufacturing country with most of its production focused on the domestic market. Increased urbanization and development has led major Chinese players to come up with innovative and cost-effective methods to manufacture ethanol. Additionally, the U.S. has developed its in-house ethanol production and self-sustaining manufacturing facilities after trade sanctions pertaining to ethanol were imposed on China and Brazil – two major ethanol manufacturing countries.
General Overview Of Ethanol Market, Its Prices In Brazil And Its effect on the Global Market
In recent times, the Brazilian ethanol industry has expanded its overall influence with an apparent increase in its ethanol production. This has been achieved by maximizing sugarcane farming that is employed to produce biofuel which produces hydrous ethanol after undergoing chemical treatment. In the coming years, experts have predicted an accelerated ethanol production in Brazil which expected to be highest in the last 10 years. Increased demand for oil and gasoline in Brazil due to increased urbanization and coming up of smart cities has led Brazilian manufacturers to increase and upscale sugarcane farming.
Consequently, Brazil plays an important role in deciding the global prices of ethanol. Brazil’s hydrous ethanol faces direct impact from its national fuel policy and, hence, hydrous ethanol (E100) is used standalone by flex-fuel vehicles. Gasoline gives a competitive edge to ethanol in Brazil. In order to maintain the profit-generating ethanol market in Brazil, the chemical is sold at a cheaper rate with some illegal adulterations in some parts of the Brazilian domestic market. Further, as gasoline scientifically produces 70% more energy on combustion than ethanol, gasoline is a favored choice among automobile manufacturers who are looking for an efficient fuel.
Petrobras is one of the major Brazilian players for fuels such as diesel, ethanol as well as gasoline. The Brazilian prices for combustion fuel were revised recently. Earlier the prices were dictated as per the rates of foreign exchange and international price rates of crude oil and its products.
The European Outlook For Ethanol
Geopolitical instability such as Brexit and duties imposed by the U.S. initially led to price hikes in imported ethanol, however, these rates have stabilized in the past few years.
After two major ethanol players in central Europe – Vivergo and Ensus discontinued operations, the ethanol supply has suffered a negative trade which thereby impacted the ethanol export in the United Kingdom. Germany is Europe’s largest ethanol consumer and is predicted to shrink its import demands by a significant margin, consequently affecting the prices of ethanol and biofuel.
Alternative fuels are taking center stage in the global geopolitical landscape and this is causing the ethanol prices to drop in the international market, but marginally rise in the domestic markets of Brazil and China. The adoption of greener and more environmentally sustainable fuels and technologies are further expected to impact global ethanol prices.