NEW YORK (Reuters) – Three ships transporting ethanol departed from the United States’ Gulf Coast to China, three commercial sources told Reuters on Monday, in a sign that fuel exports are increasing significantly from the United States to the United States. parents.
Shipments may exceed the total amount of U.S. ethanol that China imported last year, a positive development for the U.S. ethanol industry, which has seen demand slow because of the coronavirus pandemic and the US-China trade war.
Each vessel has a capacity of about 30,000 tonnes, or about 240,000 barrels of ethanol, the sources said, although the exact amount of renewable fuel on board is not immediately clear.
GRAPHIC: US ethanol exports to China vs. the rest of the world –
It was also unclear when the cargo would arrive in China, which buys ethanol from the United States for fuel to mix with gasoline. A source said at least two of the tankers left in late February.
The three shipments are expected to be among the ships previously ordered and more are expected to be shipped to China in the coming months, said three Asian traders.
In January, Chief Financial Officer of Archer Daniels Midland Co, Ray Young, said that China purchased “about 200 million gallons” (4.76 million barrels) of U.S. ethanol in the first half of 2021.
That would be equivalent to about 15-20 ships of renewable fuel, traders said, mostly ordered last year, when ethanol prices in the U.S. reached their lowest point.
COFCO and Sinopec are among the buyers of American shipments, traders say.
Two cargoes ordered by COFCO have arrived in China recently, while Sinopec is shipping imported ethanol to domestic markets, said a China source familiar with the ethanol trade.
GRAPHIC: Ethanol and gasoline prices in the USA –
“Domestic grain prices continue to rise, which raised domestic ethanol prices and created a large profit margin for ethanol imports,” said the source, who declined to be identified because he was not authorized to speak to the media.
COFCO and Sinopec did not immediately respond to the faxes requesting comments.
Although China imported an annual record of 4.72 million barrels of ethanol from the U.S. in 2016, it has recently not been a major importer. However, the narrowing of the supply of domestic corn used to make biofuel, together with comparatively cheaper prices in the US, stimulated the need for imports.
“Domestic corn is very expensive,” said a China-based trader and an international trading house, making imports profitable.
US ethanol to China on a CIF basis is currently quoted at around $ 700 per ton, while domestic ethanol in March is just over $ 1,000 per ton, according to the trader.
If the three tankers were full, the loads would amount to about 720,000 barrels of ethanol, more than the 506,000 barrels of U.S. ethanol shipped to China in the whole of 2020.
The increase in exports occurs at a time when the US ethanol industry is trying to return to the most normal levels of production after the destruction of the demand for the pandemic. Ethanol production increased to 849,000 barrels a day for the week through February 26, from a record low of 537,000 bpd last April, the EIA data showed.
The United States and China signed a trade agreement in January 2020, in which China pledged to buy more American agricultural, energy and manufactured products.
Reporting by Stephanie Kelly in New York and Hallie Gu in Beijing; Editing by Marguerita Choy and Jacqueline Wong