US EIA says ethanol output slips, stocks up to all-time high on week

Source: By Platts • Posted: Friday, March 16, 2018

US ethanol production averaged 1.025 million b/d in the week ended March 9, down 32,000 b/d from the prior week, Energy Information Administration data showed Wednesday. Compared with the same week last year, production was 20,000 b/d, or 1.91%, lower. Production was well below market expectations.

Lower production from seasonal turnarounds is not expected for several more weeks, so the downtick in Wednesday’s data was a surprise. It was only the fourth time this year that output has been lower than the same week in 2017. Total stocks roared higher to an all-time high, well above market expectations for the week-on-week change. Inventories added 1.137 million barrels to 24.281 million barrels.

Total inventories were 1.515 million barrels above last year’s level. The Gulf Coast saw the largest build for the third consecutive week as the region climbed 1.025 million barrels. Strong exports out of the region have encouraged market participants to move product into the area, raising stocks. Though stocks are high, most of the product in tank is export specification, keeping premiums for domestic-grade in the Houston market supported, a source said Wednesday. The Midwest saw its third consecutive stock increase as it added 701,000 barrels to finish at an all-time high.

The Midwest is host to the largest number of ethanol plants out of all US regions. Flooding along the Illinois River kept some barges from moving out of Kinder Morgan’s Argo, Illinois, terminal. With maintenance season approaching some plants may also be storing product to sell while plants are offline. East Coast stocks shed 457,000 barrels as it was the only region to end the week lower than last year’s levels, down 557,000 barrels from the same week in 2017. Strong gasoline demand in the region has helped support premiums in the New York Harbor market, one of the busiest trading hubs on the East Coast. Inventory on the West Coast dropped sharply, shedding 126,000 barrels amid the 14th consecutive week of no reported imports. It was the region’s largest decline since early December 2017.

The West Coast is the most common destination for imports as Brazilian sugarcane-based ethanol generates both D5 RINs and Low Carbon Fuel Standard credits under California’s LCFS. The four-week rolling average of the refiner and blender net ethanol input rose 8,000 b/d to 892,000 b/d, while the weekly average climbed 16,000 b/d to 910,000 b/d. The four-week rolling average of gasoline demand, represented by product supplied, rose 146,000 b/d to 9.195 million b/d, while the weekly average ticked 366,000 b/d higher to 9.642 million b/d. The ethanol blending rate, calculated by dividing the refiner and blender ethanol input by gasoline demand, fell to 9.70% from 9.77% the previous week.