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Ethanol markets unaffected by higher Chinese tariff on imported biofuel

  • Author
  • Joshua Pedrick
  • Editor
  • Annie Siebert
  • Commodity
  • Agriculture

Houston — (Corrects size of tariff in paragraph one, provides clarification in paragraph three, in story published September 19)

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US and Asian ethanol markets on Wednesday were unaffected by the announcement that the Chinese government would hike the import tariff on undenatured US ethanol to 50% from 40%.

"The 65% duty [on undenatured ethanol] had already killed the trade flow between the US and China. The 10% hike will not make a big difference," an Asia-based trader said.

The tariff had been at 65% earlier in the year, but the Chinese government lowered it to 40%. The 40% tariff is what the government intends to raise to 50%.

The ethanol arbitrage from the US to China has been closed for the most of the year due to the climbing tariffs, and market participants don't expect any change imminently.

In the meantime, traders considered things business as usual and haven't paid much attention to incremental changes in the size of the tariff.

"When it doesn't work it doesn't work," one US source said. "The tariff could be +10% or +10,000,000%."

The US benchmark Argo market slid Wednesday, falling to around $1.2525/gal after S&P Global Platts assessed it at $1.2675/gal Tuesday.

The main Asian ethanol reference price, CIF Philippines, fell $2/cu m to $425.67/cu m on Wednesday.

-- Joshua Pedrick,; Srijan Kanoi,

-- Edited by Annie Siebert,