The Global Ethanol Market to Make a Bet on Antiseptics Amid a Pandemic and Cheap Oil

IndexBox has just published a new report: 'World - Ethyl Alcohol - Market Analysis, Forecast, Size, Trends, and Insights. Here is a summary of the report's key findings.

In 2020, the use of ethanol as a fuel additive became unprofitable, threatening plans to switch to environmentally friendly fuels, but the demand for alcohol-based disinfectants increased significantly.

Key Trends and Insights

In 2020, the use of ethanol as a fuel additive declined sharply due to the low traffic intensity during the lockdown and a 9% drop in gasoline consumption compared to the previous year.

With low oil prices and the high cost of corn feedstock for bioethanol production, the use of the latter as biofuel becomes unprofitable and threatens countries' plans to switch to environmentally friendly fuels.

In 2020-2021, China imported expensive ethanol from the U.S. to maintain the consumption of environmentally friendly E10 gasoline, containing a 10% ethanol mixture, regulated at the national level. Tightening supplies of domestic corn and high ethanol prices within the country forced China to take this step, despite 45% tariffs on U.S. cargoes are still in place in China.

During the pandemic, the demand for alcohol-based disinfectants increased significantly. Some large ethanol producers have reoriented to sanitizer production. Despite the significant costs of retooling production lines, it is expected that the increased sanitizer demand to continue for several years, even when the pandemic subsides.

The performance of the market is forecast to increase slightly, with an anticipated CAGR of +1.1% for the period from 2019 to 2030, which is projected to bring the market volume to 91B liters by the end of 2030.

Consumption by Country

In 2019, the global ethanol market increased by 5.3% to $53.8B, rising for the third consecutive year after three years of decline. In general, consumption, however, continues to indicate a pronounced decline. Over the period under review, the global market reached the peak level at $64B in 2013; however, from 2014 to 2019, consumption remained at a lower figure.

The U.S. (36B liters) remains the largest ethanol-consuming country worldwide, comprising approx. 45% of the total volume. Moreover, ethanol consumption in the U.S. exceeded the figures recorded by the second-largest consumer, China (11B liters), threefold. The third position in this ranking was occupied by India (4.5B liters), with a 5.6% share.

From 2012 to 2019, the average annual rate of growth in terms of volume in the U.S. stood at -3.9%. In other countries, the average annual rates were as follows: China (+3.0% per year) and India (+3.4% per year).

In value terms, the U.S. ($25.6B) led the market, alone. The second position in the ranking was occupied by China ($7.2B). India followed it.

In 2019, the highest levels of ethanol per capita consumption were registered in the U.S. (110 liters per person), followed by Canada (36 liters per person), Germany (19 liters per person), and Brazil (10 liters per person), while the world average per capita consumption of ethanol was estimated at 10 liters per person.

In the U.S., ethanol per capita consumption declined by an average annual rate of -4.6% over the period from 2012-2019. In other countries, the average annual rates were as follows: Canada (+2.9% per year) and Germany (+1.8% per year).

Global Production

In 2019, production of ethyl alcohol increased by 1.5% to 81B liters, rising for the fourth consecutive year after two years of decline. Over the period under review, global production attained the peak volume at 86B liters in 2013; however, from 2014 to 2019, production stood at a somewhat lower figure.

Production by Country

The U.S. (41B liters) remains the largest ethanol-producing country worldwide, accounting for 51% of total volume. Moreover, ethanol production in the U.S. exceeded the figures recorded by the second-largest producer, China (10B liters), fourfold. India (3.9B liters) ranked third in terms of total production with a 4.8% share.

In the U.S., ethanol production declined by an average annual rate of -2.1% over the period from 2012-2019. The remaining producing countries recorded the following average annual rates of production growth: China (+1.7% per year) and India (+0.6% per year).

Global Exports

In 2019, overseas shipments of ethyl alcohol decreased by -4.6% to 16B liters for the first time since 2014, thus ending a four-year rising trend. In general, total exports indicated a prominent expansion from 2012 to 2019: its volume increased at an average annual rate of +5.5% over the last seven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2019 figures, exports increased by +73.1% against 2014 indices. The pace of growth was the most pronounced in 2018 with an increase of 25% against the previous year. As a result, exports attained a peak of 17B liters, and then contracted slightly in the following year.

In value terms, ethanol exports stood at $8.7B (IndexBox estimates) in 2019. Over the period under review, exports, however, recorded a relatively flat trend pattern. The pace of growth appeared the most rapid in 2017 when exports increased by 13% against the previous year. Over the period under review, global exports attained the peak figure at $8.9B in 2012; however, from 2013 to 2019, exports remained at a lower figure.

Exports by Country

The U.S. was the major exporting country with an export of about 6.8B liters, which recorded 42% of total exports. Brazil (1.8B liters) held the second position in the ranking, followed by the Netherlands (1.5B liters) and France (0.9B liters). All these countries together held approx. 26% share of total exports. Pakistan (660M liters), Hungary (639M liters), Belgium (544M liters), Germany (451M liters) and Spain (316M liters) occupied a minor share of total exports.

Exports from the U.S. increased at an average annual rate of +13.0% from 2012 to 2019. At the same time, Pakistan (+18.4%), Hungary (+13.1%), the Netherlands (+12.5%), Germany (+11.0%), Spain (+10.4%) and Belgium (+2.2%) displayed positive paces of growth. Moreover, Pakistan emerged as the fastest-growing exporter exported in the world, with a CAGR of +18.4% from 2012-2019. France experienced a relatively flat trend pattern. By contrast, Brazil (-6.9%) illustrated a downward trend over the same period. From 2012 to 2019, the share of the U.S., the Netherlands, Pakistan, and Hungary increased by +16%, +3.4%, +2.3%, and +1.5% percentage points, while France (-2.8 p.p.) and Brazil (-16 p.p.) saw their share reduced. The shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, the U.S. ($2.5B) remains the largest ethanol supplier worldwide, comprising 28% of global exports. The second position in the ranking was occupied by the Netherlands ($1B), with a 12% share of global exports. It was followed by Brazil, with an 11% share.

In the U.S., ethanol exports expanded at a CAGR of +3.3% over the period from 2012-2019. In other countries, the average annual rates were as follows: the Netherlands (+7.1% per year) and Brazil (-10.6% per year).

Export Prices by Country

The average ethanol export price stood at $0.5 per liter in 2019, surging by 7.7% against the previous year. Over the period under review, the export price, however, continues to indicate a deep reduction. The global export price peaked at $0.8 per liter in 2012; however, from 2013 to 2019, export prices stood at a somewhat lower figure.

Prices varied noticeably by the country of origin; the country with the highest price was Spain ($0.8 per liter), while the U.S. ($0.4 per liter) was amongst the lowest.

From 2012 to 2019, the most notable rate of growth in terms of prices was attained by Hungary, while the other global leaders experienced a decline in the export price figures.

Source: IndexBox Market Intelligence Platform