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US West Coast emerges as likely ethanol supplier for Asian importers

Singapore — The US West Coast is set to become a new export outlet for ethanol cargoes to Asia as competition heats up among traders and producers to capture more market share in the region, sources said on the sidelines of an industry conference late last week.

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An independent oil company in the Philippines had chartered a vessel to carry 16,000 cu m of anhydrous fuel-grade ethanol from US state of Oregon, the first shipment of ethanol from the US West Coast to Asia, according to sources at the Wiz Ethanol Asia Conference held in Singapore last week.

The cargo is expected to arrive in early August.

It was said to have been bought at around $500/cu m on a CIF basis. As the volume is far more than the oil company's requirements, most of the product was likely to be resold to other local companies, sources said.

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More cargoes from the West Coast are heading to Asia with a European trader reporting that some vessels have been ballasting from Asia to the US West Coast. But there were no confirmed loadings for now.

The US West Coast has emerged as an alternative source for ethanol as traditionally, exports to Asia load from the southern Gulf Coast.

Apart from a swifter voyage across the Pacific Ocean that does not involve either a detour via the Panama Canal or around Africa, industry participants said that vessels would be able to avoid the congestion that has plagued Gulf Coast ports periodically.

The shorter turnaround would suit the buying patterns of Asian importers, particular the Philippines where tenders are usually only issued two to three months ahead.

T raders have previously said that they were unable to fulfill most of these tenders within the stipulated arrival dates due to the lengthy process when shipping out from the US Gulf Coast.

Oil companies in the Philippines are obliged to buy domestically produced fuel ethanol first, so their import requirements can only be determined after their purchase quotas are fixed every quarter.

However, sources warned that shipping ethanol from the US West Coast might not necessarily lead to substantial savings.

Although the shorter route would imply a lower freight rate, with far less demand for chemical tankers compared to the Gulf Coast, it can prove tricky to charter a vessel promptly especially if available tonnage is tight.

Furthermore, the cost of transporting the product from the Midwestern corn belt to the Pacific coast via rail would be more costlier than by barge to Houston or New Orleans, offsetting any savings on freight.

--Toh Wei Zheng, wei_zheng.toh@spglobal.com
--Edited by E Shailaja Nair, shailaja.nair@spglobal.com