Siouxland Ethanol to suspend production in April, citing plummeting fuel demand

Source: By Sioux City Journal • Posted: Monday, March 30, 2020

 2017 Progress Siouxland Ethanol (copy)

Siouxland Ethanol, an 80-million gallon ethanol plant in Jackson, Nebraska, has announced it will shut down in April due to a severe slump in fuel demand. Tim Hynds, Sioux City Journal

JACKSON, Neb. — Siouxland Ethanol has announced it will shut down in April, citing low demand for the corn-based fuel additive.

A “special alert” posted on the Jackson ethanol plant’s website predicted that U.S. ethanol production would need to be cut by 50 percent before production could be restarted at the 80-million-gallon plant.

“The negative impact of the COVID-19 pandemic on gasoline and ethanol demand in the United States is severe,” the statement read in part.

In its statement, the Northeast Nebraska plant said its employees would remain “in tact” (intact).

“We intend to keep our balance sheet and financial position strong, our employees in tact, and we look forward to resuming production as soon as economic circumstances allow,” the statement continued.

Ethanol prices crashed this month — from a little more than $1.37 on Feb. 19 to as low as just over 90 cents a gallon by March 23, according to figures on the NASDAQ exchange. Prices had rebounded to above 99 cents as of Friday.

Crude oil prices have also plunged in recent weeks, bruising the oil industry. West Texas Intermediate fell to below $21 a barrel last week, according to the Associated Press. Ethanol markets tend to be dragged down when oil and gas prices slump.

Monte Shaw, executive director of the Iowa Renewable Fuels Association, said the current situation in the ethanol industry is worse than the problems of last fall, when a number of plants faced closure after President Donald Trump issued a series of waivers to oil refineries allowing them not to blend ethanol into gasoline.

“I don’t want to sugarcoat it, it’s dire, it’s ugly out there,” Shaw said — though he stressed that not every ethanol plant is will stop production.

Shaw said he expects ethanol plants in Iowa will reduce capacity and, in some cases, shut down completely until market conditions improve: “A sizable chunk of our industry is going to have to be taken off-line, one way or the other, for however long this lasts.”

“I don’t think we’ve seen the end of it, until we know where the bottom on gasoline demand is,” he said.