Home Business The ethanol sector in crisis despite the consumption of hydroalcoholic gel

The ethanol sector in crisis despite the consumption of hydroalcoholic gel

by drbyos

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Ethanol manufacturers around the world are suffering the brunt of the collapse in oil demand, linked to containment, in the face of the coronavirus. The increased consumption of hydroalcoholic gel is far from compensating for the losses in the sector.

Manufacturers of ethanol based on sugar or cereals have reoriented their production to help hospitals and pharmacies obtain hydroalcoholic gel, a commodity that has become scarce since the appearance of Covid-19. In France, an express change in regulations has allowed sugar giants Tereos and Cristal Union to produce pharmaceutical grade alcohol from their sugar syrup. In the United States, corn ethanol manufacturers have started to do this. They supply the hydroalcoholic gel factories, whose consumption has tripled in the country.

Hydroalcoholic gels: only 1% of the ethanol market

But the quantities of ethanol sold to this pharmaceutical market are negligible compared to that of biofuels, which is collapsing. Hydroalcoholic gels weigh less than 1% on the ethanol market. They therefore do not prevent the sector from suffering the full brunt of the virtual disappearance of road traffic, faced with the epidemic.

Stationary traffic weighs much more

Given that there is a minimum of 10% ethanol in gasoline depending on the country, we observe a drop in ethanol consumption by 30% in Europe, by 50% in Brazil, by 65% ​​in the States United States, where the price of ethanol fell from 1.4 dollars per gallon to less than 0.9 dollars in a few weeks. US ethanol stocks are at their highest level in history, the equivalent of 25 million barrels.

Probably final plant closings

The trade dispute between Washington and Beijing had already dealt a blow to this sector, with the end of ethanol exports to China. The breakdown of the alliance between OPEC and Russia then drove fuel prices down. The coronavirus is now shutting down ethanol plants that will not recover.

Corn prices down unlike other grains

Note that upstream, producers of corn, the raw material for ethanol in the United States, are the only ones to see the price of their cereal dip on the Chicago Stock Exchange, while the prices of wheat and soybeans are turning their heads in the face of rising global food demand.

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