Ethanol imports seen growing by 8.3% in 2018

In Photo: An ethanol plant in Nevada, Iowa

The country’s ethanol imports next year could increase by 8.3 percent to 325 million liters (ML), from the estimated 300 ML this year, according to a Global Agricultural Information Network (Gain) report.

The Gain report, which was prepared by the United States Department of Agriculture Foreign Agricultural Service in Manila, noted that despite an expected hike in output, local ethanol production would still be insufficient to meet the domestic demand for bioethanol in 2018.

“Overall ethanol imports are expected to increase modestly through 2018 due to inadequate domestic production and increased gasoline consumption,” the Gain report read.

“Increasing motor-vehicle sales, accelerating construction activities, a growing population and continued expansion of the Philippine economy, all translate to increased fuel consumption in the next three to five years,” it added.

The Gain report projected the Philippine ethanol production next year would increase by 2.19 percent to 280 ML, from the expected output of 274 ML this year.

The report added that the country’s aggregate ethanol production capacity next year would expand by 23.29 percent to 397 ML, from this year’s 322 ML.

“Output in 2018 is expected to slightly grow, but capacity utilization should decline from the 2017 level as production is constrained by marketing and distribution infrastructure limitations,” the report read.

“Two additional ethanol plants with a combined 75-ML capacity are expected to operate in 2018, bringing total capacity to 397 ML,” it added.

However, the Gain report noted that the country’s capacity utilization next year would drop to 71 percent, from this year’s 85 percent.

For this year, the Gain report projected that the country’s total ethanol imports would settle at 300 ML, 15.38 percent higher than the 260 ML a year ago.

The Gain report added that the country’s local ethanol production this year could increase by 19.13 percent to 274 ML, from 230 ML recorded last year.

“By 2017, while three more plants are expected to operate, and production likely to again increase from the previous year, output share relative to consumption will remain fairly flat,” it read.

“Reaching the 10-percent mandate using locally produced ethanol is not expected in at least the medium term [three to five years],” it added.

The Gain report said the increase in the number of alcohol plants shifting to fuel ethanol production would continue in the next three to five years.

“As mentioned in the previous annual report, the increase in the number of distilleries is the result of potable alcohol plants shifting to fuel ethanol production. The shift is cheaper compared to building a new facility, and the adjustments take only two to three months, according to industry,” it read.

“The trend explains the shift from cane to molasses as the primary feedstock used. This trend is likely to continue in the medium term,” it added.

Philippine aggregate ethanol production this year is estimated to reach 322 ML, 14.18 percent higher than last year’s 282 ML, as another distillery with a 40-ML capacity is expected to start operations.

With the hike in aggregate capacity production, the country’s capacity utilization would be around 85 percent, up from 83 percent last year, according to the Gain report.

Philippine ethanol imports last year declined 16.4 percent to 260 ML, from 311 ML in 2015, due to increased local production.

“Imports from the US, however, increased 35 percent to 241 ML in 2016, from 178 ML in 2015. The US maintained its dominance, accounting for 93 percent of total ethanol imports in 2016, increasing its share from 57 percent in 2015,” the report read.

“According to US Census data, the Philippines was the fifth-largest market for US ethanol in 2016, with sales reaching 218 ML valued at $103 million,” it added.

The Philippines also sources its ethanol from Australia and South Korea.

Image Credits: Luke Sharrett/Bloomberg

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Jasper Emmanuel Y. Arcalas is a graduate of the UST Journalism School (Batch 2016). He currently covers agribusiness for the BusinessMirror. He joined the news outfit in August 2016.