Asian Ethanol Production Grows in Quest for Self-Sufficiency - An F. O. Lichts Report

Driven by population growth and ambitious fuel alcohol programs Asia has emerged as one of the world's leading buyers of ethanol. This development has been supported by the world's major sellers which have singled out the region as the place where market share must be gained at almost any price.

This logic prevailed until 2016 when Asian imports hit an all-time high of 3.5 bln litres, up by a whopping 20% on the year.

However, in 2017 imports fell by 500 mln litres on a combination of higher production and stagnating sales. The trend of shrinking imports can be expected to continue in 2018. At the same time consumption is forecast to grow strongly. At 6%, next year’s increase will be far above the average for the world as a whole. There is little doubt whether or not production will be able to keep pace with this development as feedstock supplies will be plentiful.

Of course, there is a lot of in-built flexibility in the Asian consumption system. If prices for fuel alcohol are too unattractive oil companies stop blending and it is up to the government to decide whether or not it wants bridge the gap with subsidies.

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