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The non-fuel ethanol price: Agriculture Price Assessments

What is non-fuel ethanol?

Platts Non-Fuel Ethanol

About 20 billion litres of ethanol, or 15-20% of global consumption, is for applications other than fuel blending. Ethyl alcohol, as it is often referred to, can be found in the manufacturing process for a very wide range of products in the chemicals and plastics, pharmaceutical, beverage and other industrial sectors, including ethyl acetate and acrylic acid, cosmetics and toiletries, detergents and cleaning products, paints and inks as well as alcoholic drinks.

Brazil is by far the largest exporter of this "non-fuel" ethanol. The largest part of the "non-fuel" exports is of Grade B product. The exports of Grade B out of Brazil over the past years have represented a share between 20% to almost 40% of the total ethanol exported out of the country. South Korea is the main destination for Grade B exports from Brazil, with the country taking 30% of the total ethanol exports in 2014. The exports to Japan represented 7% of the total ethanol that left Brazil last year. The majority of Grade B is sold on a FOB Santos or Paranagua port basis to major trading companies.

In Asia, the largest import destination for non-fuel ethanol is the port of Ulsan in south Korea, where close to 700,000 cubic meters are either stored or break bulk every year, for onward sale to either Korean or Japanese end-users. The majority of the product is sold to Japanese beverage companies, which use the ethanol in the production of sake, shochu and beer, while a slightly smaller portion is used by Korean chemical and beverage companies. There are many grades of ethanol, and often many names for the same grade, but the most common name for the non-fuel ethanol used in Japan and Korea is Grade B.

North Asian Grade B imports typically only come from a small pool of seaborne exporters, chief among which are Brazil and Pakistan. But in recent months, most Pakistan volumes have been sold into China, a new entrant in the Asian market. This has left Brazil as the main supply hub for Grade B ethanol on a CFR Ulsan basis. Platts on October 1, 2015 started a daily assessment of the import value of Ethanol Grade B on a CFR Ulsan basis.

How Platts assesses the non-fuel ethanol price

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Platts' non-fuel ethanol price assessments are based on robust and transparent market data that includes, but is not limited, to firm bids and offers, expressions of interest to trade and confirmed trades reported during the Market On Close process every day.

In Brazil, Grade B FOB Santos/Paranagua basis is assessed in USD per cubic meter and reflects the tradable and repeatable spot market value at 1415 Houston time. Price information is collected directly from a wide cross-segment of active market participants.

The assessment reflects typical grade B specifications, normalized to standard Ethanol Grade B at 20 degrees with a maximum of 40mg/100ml of higher alcohols. Volume is normalized to 5,000 cu m, while the timing will be for delivery to Ulsan 60-90 days forward. In the absence of representative FOB Santos/Paranagua price information, Platts may also refer to domestic hydrous ex-mill Ribeirao price assessment adjusted premium to Grade B spec, plus freight and terminal costs.

In Asia, Grade B CFR Ulsan is assessed in USD per cubic meter and reflects the tradable and repeatable spot market value at 1630 Singapore time. Price information is collected directly from a wide cross-segment of active market participants.

The assessment reflects typical grade B specifications, normalized to standard Ethanol Grade B at 20 degrees with a maximum of 40mg/100ml of higher alcohols. Volume is normalized to 5,000 cu m, while the timing will be for delivery to Ulsan 60-90 days forward. In the absence of representative CFR Ulsan price information, Platts may also refer to FOB prices from relevant supply origins using prevailing spot freight rates.

Data collected by Platts is published in full on our real time service Platts Biofuels Alert and is summarized in our daily publication Biofuelscan.


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