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April 24, 2019

The United States exported a record volume of ethanol in 2018 for second consecutive year

U.S. annual fuel ethanol exports by destination
Source: U.S. Energy Information Administration, Petroleum Supply Monthly

The United States exported 112,000 barrels per day (b/d) of fuel ethanol in 2018, surpassing the record high of 91,000 b/d set in 2017. At the same time, U.S. imports of fuel ethanol decreased about 30% in 2018 to less than 4,000 b/d, which resulted in the United States exporting more fuel ethanol than it imported for the ninth year in a row.

U.S. fuel ethanol exports grew nearly 25% in 2018 even though the number of export destinations decreased by half, down to 17 destinations in 2018. About half of all ethanol was shipped to Brazil or Canada, which increased annual U.S. fuel ethanol receipts (or imports) by 20% and 7%, respectively.

Brazil, the world’s second-largest producer and consumer of fuel ethanol, increased imports of U.S. ethanol for the fifth consecutive year, reaching over 33,000 b/d in 2018 and accounting for nearly one-third of all U.S. ethanol exports. Ethanol consumption in Brazil is driven largely by a fuel ethanol blending mandate, which is currently set at 27%, and demand for hydrous ethanol (E100) that competes with traditional gasoline blends at the pump.

Ethanol in Brazil is primarily produced from sugarcane, and as a result, it is seasonally driven by the sugarcane harvest period from May through October. Ethanol production in Brazil typically peaks during the third quarter of each year.

U.S. monthly fuel ethanol exports to Brazil
Source: U.S. Energy Information Administration, Petroleum Supply Monthly

In early 2018, the price discount associated with ethanol from the United States led to monthly record-high levels of U.S. fuel ethanol exports to Brazil. U.S. exports to Brazil reached nearly 6 million barrels (a rate of 63,000 b/d) in the first quarter of 2018, 64% higher than in the first quarter of 2017. Almost half of the total volume of ethanol exported to Brazil in 2018 was exported in the first quarter. These export levels increased despite Brazil’s introduction in September 2017 of a new 20% tariff levied on U.S. ethanol volumes that surpass 150-million-liter quarterly quotas (about 1 million barrels).

Canada remained the second-largest destination of U.S. ethanol, importing nearly 23,000 b/d in 2018. Canadian demand for U.S. fuel ethanol is driven by different ethanol mandates for gasoline across Canadian provinces, which range between 5.0% and 8.5%.

The third-largest destination for U.S. ethanol was India at 10,000 b/d, followed by South Korea and the Netherlands. The remaining 12 countries received just under 35,000 b/d of U.S. ethanol exports.

The United States imported a limited amount (4,000 b/d) of sugarcane ethanol in 2018, almost entirely from Brazil. U.S. ethanol imports have been low in recent years because of strong domestic production levels along with a preference for biomass-based diesel over imported sugarcane ethanol to meet both the Renewable Fuel Standard and California’s Low Carbon Fuel Standard (LCFS).

Principal contributors: Sean Hill, Steve Hanson