US industrial ethanol buyers in Ulsan search for other cargoes amid tight supply

South Korean and Japanese buyers of US B-grade industrial ethanol are facing difficulty in securing cargoes, sources told S&P Global Platts.

"I had recently bought for March and May, US B-grade ethanol, but I think that going forward, cargoes will be difficult to procure," said a market participant.

Another buyer in Japan also said he was facing difficulty in getting US B-grade offers from suppliers due to the outbreak of COVID-19 and the resulting demand destruction, which caused negative margins for numerous US ethanol plants, and said was considering turning to Brazilian products to fulfill needs.

Brazilian Grade B ethanol from the new crop will most likely land in Ulsan from the middle of July onward at above $600/cu m for the first shipment, said a source, who reported receiving increased demand from buyers for ethanol to produce hand sanitizers and other medical products.

China also is being considered as another source of ethanol supply to Korea and Japan if Brazilian supplies falter, although ethanol prices in China are expected to rise as corn feedstock costs in the country become more expensive, according to traders in China.

Brazilian products, traditionally, tend to get more competitive toward the later part of the year.

Elsewhere, South Korean ethanol imports fell 14.79% month on month in March, data released by the Korea Customs Service showed. Year on year, ethanol imports fell 7.25% in the month.

In March, 41,746 mt of ethanol passed Korean customs versus 48,994 mt in February.

Undenatured ethanol imports from Brazil jumped to 12,114 mt in March from 8,080 mt in February. Imports of Pakistani undenatured ethanol fell to 1,169 mt from 3,389 mt in February. Offtake of Cambodian ethanol was at 1,569 mt against 1,634 mt in February.

Elsewhere, denatured ethanol shipments into South Korea, used mainly on the industrial side, fell to 25,072 mt from 34,683 mt in February, with the US remaining the main supplier at 18,986 mt.