US DATA: EIA says US ethanol production and inventories fall

Source: By S&P Global • Posted: Thursday, September 17, 2020

New York — US ethanol production averaged 926,000 b/d for the week ended Sept. 11, a decrease of 15,000 b/d on the week and down 77,000 b/d year on year, data from the Energy Information Administration showed Sept. 16.

Production was on the low end of market expectations. Seasonal maintenance at ethanol plants around the country has started, with most plants going offline for about five days to finish routine maintenance.

US ethanol stocks dropped 195,000 barrels to 19.798 million barrels for the second consecutive week of declines. The draw was also on the low end of market expectations.

Sources have said that a steep backwardation in the ethanol price curve kept market participants from holding onto product in storage, leading to tightness as the industry moves into maintenance season.

The Midwest region shed 381,000 barrels to finish with 6.404 million barrels for the largest decline of the defined regions. The Midwest is home to most of the ethanol plants in the US and is a significant trading hub. The decline reflected product moving out of storage at plants amid turnarounds, as well as shipments from major terminals in the region.

West Coast inventories dropped by 39,000 barrels to 3.169 million barrels, despite the EIA reporting 36,000 b/d of imports in the week. Ethanol imports typically flow into California, as imported sugarcane-based ethanol from Brazil generates more value from carbon credits under the state’s Low Carbon Fuel Standard.

East Coast stocks added 162,000 barrels to end the week with 6.323 million barrels. Tightness in New York Harbor, the largest trading hub on the East Coast, prompted market participants to move product into the region.

Gulf Coast stocks rose by 73,000 barrels to end the week at 3.503 million barrels. The Gulf Coast is the origin for most exports from the US as well as a key consumption hub.

The four-week rolling average of the refiner and blender net ethanol input decreased by 3,000 b/d to 848,000 b/d, while the weekly average rose by 15,000 b/d to 845,000 b/d.

The four-week rolling average of gasoline demand, represented by product supplied, declined by 38,000 b/d to 8.704 million b/d. The weekly average rose by 88,000 b/d to 8.478 million b/d.

The four-week rolling average of the ethanol blending rate, calculated by dividing the refiner and blender ethanol input by gasoline demand, increased to 9.74% from 9.73%.