UPDATE 1-China bought ‘roughly 200 mln gallons’ of U.S. ethanol for H1 2021 – ADM – Successful Farming

(Adds details and background, adds quote)

By Karl Plume

CHICAGO, Jan 26 (Reuters) – China has bought “roughly 200
million gallons” of U.S. ethanol for the first half of 2021,
matching its previous record for annual imports of the
corn-based biofuel, Archer Daniels Midland Co CFO Ray
Young said on Tuesday.

The accelerated imports are among several positive signs for
the ethanol sector which has been hard hit by years of
oversupply and, more recently, a sharp drop in demand as the
coronavirus pandemic slashed fuel use.

“China actually has been buying U.S. ethanol. That’s
something that they have not been doing over the past couple of
years,” Young said on an earnings-day call with analysts.

“We do see, particularly in the area of ethanol, we see
green shoots of recovery in 2021 for this business here,” he
said after the company reported a stronger-than-expected
fourth-quarter profit on Tuesday.

China has not traditionally been a large importer of
ethanol, but rising demand for renewable fuels and a
smaller-than-expected domestic crop of corn used to make the
biofuel has spurred need for imports.

China had planned a nationwide rollout of gasoline blend
containing 10% ethanol in 2020 in a environmental push towards
biofuels. But the rollout was suspended following a sharp
decline in corn stocks, Reuters reported.

China’s energy watchdog on Dec. 31, however, said oil and
gas companies should restore supply of ethanol-blended gasoline
as soon as possible, in a sign the green fuel push may be back
on track.

Imports of 200 million gallons would eclipse China’s
previous annual import record of about 198.1 million gallons in
2016, according to U.S. Census Bureau trade data.

ADM did not disclose if it was among China’s suppliers.

Valero Energy Corp is one of the companies that has
sold ethanol cargoes to China, two U.S. market participants
said. Valero did not immediately respond to a request for
comment.

Despite the positive signs, about 10% to 15% of U.S. ethanol
production capacity remains idled due to poor margins, including
two dry corn mills owned by ADM. Those two mills, Young said,
could restart production in the first half of this year if
margins improve.

(Reporting by Karl Plume in Chicago, Additional reporting by
Mark Weinraub in Chicago and Stephanie Kelly in New York
Editing by Marguerita Choy)

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