Philippines fuel-grade ethanol hits record low at $407/cu m after US markets tumble

Singapore — The CIF Philippines fuel-grade ethanol market was assessed at a record low $407/cu m Tuesday, following US ethanol markets lower amid the demand destruction caused by the coronavirus.

S&P Global Platts assessed the CIF Philippines marker down $7/cu m day on day Tuesday in the wake of the Platts benchmark Chicago Argo assessment hitting a record low $1.04/gal on Monday, down a sharp 14 cents/gal on the day. It was the lowest level since Platts began assessing the biofuel in 2003, and well below the previous record low of $1.1550/gal recorded on July 29, 2003.

"I never seen US ethanol fall so low before," a trader said.

In addition to the demand destruction caused by the coronavirus, US ethanol markets have been grappling with a deluge of over-production that saw inventories hit 24.334 million barrels in the week to March 6, up 3% year on year, US Energy Information Administration data showed last Wednesday.

With the US the major supplier of cargoes to the Philippines, the CIF Philippines marker has been on a downtrend since January.

However the current record low price of US ethanol was unlikely to attract buyers, with much of the central Philippines in lockdown and demand for fuel ethanol set to fall, market sources said.

Freight delays are also becoming an issue, with US ethanol shipped from the US Gulf facing delays of up to two weeks, a market participant said.

The Panama Canal Authority last month adjusted the number of daily reservation slots for vessels available to 27 from February 15 due to a drought. The imposition of new water measures from that date for the Panama Canal due to the low level of Gatun Lake were starting to cause shipping delays, market sources said.