US EIA says ethanol output, stocks modestly lower on week

Source: By Joshua Pedrick, Platts • Posted: Thursday, August 30, 2018

Houston — US ethanol production averaged 1.070 million b/d in the week that ended August 24, down 3,000 b/d week on week, Energy Information Administration data showed Wednesday.

Output in the most recent reporting week rose 28,000 b/d or 2.69% compared with the year-ago week. Production for the week that ended August 24 was within market expectations.

Recent tumbles in feedstock corn prices have kept margins afloat, allowing plants to maintain high output.

Stocks fell 198,000 barrels to 23.061 million barrels, with the focus on a drawdown on the Gulf Coast. Inventories were 1.758 million barrels higher than in the same week last year. The stock decline was within market expectations.

The Gulf Coast saw a 301,000-barrel decrease, backing away from all-time highs set in the previous two weeks. The Gulf Coast is the most common origin for ethanol exports from the US and sources said the draw was linked to a vessel departing for the Arabian Gulf. The vessel had been expected to depart earlier, but how the loading was reported to the EIA may have delayed the stock draw until Wednesday’s data release.

“That boat was going out to the Arabian Gulf, at least 500,000 barrels,” said a broker. “There’s debate that some locations meter the product as it goes on the ship and some locations where it doesn’t get metered until the whole boat is loaded out.”

The Rocky Mountain region saw the only other decline in inventory. As the smallest storage region, changes in inventories there have less effect on the market.

The Midwest added 92,000 barrels as plants added to on-site storage ahead of seasonal maintenance. The Midwest is host to the largest number of ethanol plants across all US regions. With turnarounds approaching, plants need to keep product on hand to meet commitments.

Stocks on the West Coast rose 17,000 barrels, with the EIA reporting imports for the first time since December 1, 2017. The West Coast is the most common destination for imports as Brazilian sugarcane-based ethanol generates both D5 renewable identification numbers (RINs) and Low Carbon Fuel Standard credits under California’s LCFS. The West Coast imported 8,000 b/d in the most recent week, in line with expectations.

S&P Global Platts Analytics forecasts Brazil will export 400 million liters of ethanol to the US in 2018, which would mean several more vessels will land in California in the coming months.

East Coast inventories rose 11,000 barrels week on week. Inventories in New York Harbor, the largest trading hub on the East Coast, spent much of July short, with market participants searching for product. But the arrival of delayed trains softened premiums in that market as supply and demand became more balanced.

The four-week rolling average of the refiner and blender net ethanol input rose 1,000 b/d to 946,000 b/d, while the weekly average climbed 7,000 b/d to 950,000 b/d.

The four-week rolling average of gasoline demand, represented by product supplied, rose 6,000 b/d to 9.553 million b/d, while the weekly average rose 446,000 b/d to 9.899 million b/d, an all-time high.

The four-week rolling average of the ethanol blending rate, calculated by dividing the refiner and blender ethanol input by gasoline demand, was unchanged at 9.90%. — Joshua Pedrick,