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U.S. fuel ethanol exporters are on track to export a record amount of the fuel in 2024. The increase in exports this year has largely been driven by demand in countries with biofuel blending mandates and cheaper-than-usual U.S. fuel ethanol prices.
Fuel ethanol is a renewable fuel made by fermenting sugar from biomass, typically corn in the United States, that is commonly blended with gasoline.
How much fuel ethanol has the United States exported so far in 2024?
In the first eight months of 2024, U.S. fuel ethanol exports averaged 121,000 barrels per day (b/d)—the most fuel ethanol exports in the first eight months of any year.
Exports have been consistently high in 2024, exceeding 100,000 b/d in each of the first eight months of this year. In comparison, U.S. fuel ethanol exports exceeded 100,000 b/d in fewer than one-quarter of the months between 2019 and 2023.
Prior to 2024, how much fuel ethanol did the United States typically export?
In each of the past five years (2019–23), U.S. fuel ethanol exports averaged between 80,000 b/d and 100,000 b/d. Annual fuel ethanol exports have only ever exceeded 100,000 b/d in 2018, when they averaged 112,000 b/d for the year because of high exports to Brazil. Since 2018, U.S. fuel ethanol exports to Brazil have decreased significantly because of Brazil’s tariffs on ethanol imports and its increasing domestic production.
Where are the increased exports going?
Increased fuel ethanol exports to Canada, Colombia, India, and the United Kingdom account for more than 60% of the growth from 2023 to 2024. Fuel ethanol exports have also increased by small amounts to several other countries. In the first eight months of 2024, exports are on track to exceed 2023 volumes to 30 countries and have already exceeded full-year 2023 volumes to 21 countries.
Note: The 2024 annual average is the year-to-date average through August.
The largest increase in fuel ethanol exports has been to India, which has ambitious fuel ethanol blend targets under its Ethanol Blended Petrol (EBP) program. India is the third most popular destination for U.S. fuel ethanol exports. After decreasing in 2022 and 2023 due to increasing supply chain costs and elevated U.S. fuel ethanol prices, U.S. fuel ethanol exports to India have rebounded to record volumes in 2024, slightly exceeding the highs from 2017 to 2020.
Although India’s EBP program prohibits the use of imported ethanol to meet blend targets, India uses imported ethanol for industrial purposes, freeing up domestic product for its transportation blend targets. With reduced production of sugarcane and rice recently, India has relied more on imports of U.S. fuel ethanol to meet industrial sector demand and free up domestic ethanol production for EBP targets.
The second-largest increase in fuel ethanol exports has been to the United Kingdom, which became the second most popular destination for U.S. fuel ethanol exports beginning in 2023. Fuel ethanol consumption has been increasing in the United Kingdom since the UK government passed an E10 standard in September 2021. In addition, fuel ethanol helps meet the increasing renewable fuel targets in the United Kingdom’s Renewable Transport Fuel Obligation program.
The United States has also been sending more fuel ethanol to Canada. Canada is already the United States’ top destination for fuel ethanol exports and could rely more on U.S. fuel ethanol exports as regional blend mandates and programs grow.
Colombia remains the fourth-largest destination for U.S. fuel ethanol exports, and this year’s increase is mostly attributable to the reintroduction of an E10 mandate and reduced domestic ethanol production. Exports to Brazil, the Philippines, and Singapore have also increased substantially, although these countries are smaller export destinations.
Why are other countries importing their fuel ethanol from the United States?
The United States is the largest global producer and exporter of fuel ethanol, and U.S. fuel ethanol prices have been relatively low in 2024. In addition, we expect fuel ethanol exports from Brazil, the second-largest producer and exporter of the fuel, to decrease in 2024 compared with 2023.
The annual average price in 2024 of fuel ethanol on the U.S. Gulf Coast, from where most U.S. fuel ethanol exports depart, has fallen about 25% from 2023 and is its lowest since 2020. On an inflation-adjusted basis, the price is about equal to the prices in 2018 and 2019.
Note: The 2024 annual average is the year-to-date average through August.
U.S. fuel ethanol prices have been low in 2024 because of large domestic inventories. U.S. inventories of fuel ethanol in 2024 have consistently exceeded the five-year (2019–23) average and have often exceeded the five-year high because of relatively high production and relatively low consumption.
Fuel ethanol production hit a record high in July and is on track for its highest annual level since 2018 because of increased production capacity and low input prices. U.S. fuel ethanol production capacity increased in 2023 and is continuing to grow in 2024. Low input prices have enabled fuel ethanol producers to maintain healthy profit margins and utilization levels despite the increased competition from new production capacity. Corn, the feedstock used to produce virtually all the fuel ethanol in the United States, has been trading at its lowest prices since 2020 because of a strong production outlook and general concerns of an oversupplied market. Natural gas, which is used to fuel production of ethanol, has also been trading at extremely low prices due to record U.S. natural gas production, flat natural gas consumption, and relatively high natural gas inventories.
Although U.S. fuel ethanol production is around record highs, consumption of the fuel has been significantly below pre-pandemic highs. Virtually all fuel ethanol consumption is for motor gasoline blending, so fuel ethanol consumption tends to track with motor gasoline consumption, which has been far below pre-pandemic highs due to structural changes reducing demand for the fuel.
Principal contributor: Jimmy Troderman
Tags: international, prices, United Kingdom, exports/imports, liquid fuels, Colombia, ethanol, India, biofuels
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