“China announced that, by 2020, they want to move toward an E10 blend within the country,” explained Ray Young, executive vice-president and chief financial officer at ADM. “And so with the 50 billion gallons of gasoline consumption at a 10% blend rate, that’s about 5 billion gallons of ethanol demand that they’re going to need. Currently, China has roughly 1 billion gallons of ethanol capacity. And they will probably expand some capacity and get toward a 2 billion number. But the implication is they’re going to have to bring in ethanol in order to try to support the E10 mandates that they’re talking about.
|Ray Young, executive vice-president and chief financial officer at ADM|
Once the United States and China work through their trade differences, Young said he expects China to turn to the United States to help address its trade imbalance issue.
“It would appear U.S. ethanol would be one of these items, which would be something that China won’t actually bring on to support their mandates in terms of E10, but also to really kind of support the trade imbalance issues,” he said. “So therefore, looking over the medium term, we’re actually feeling optimistic that could create the potential in order to help us kind of drive ethanol margins in this industry back to the levels that we thought we were going to be, which is more in the 30¢ to 40¢ per gallon range over the medium term.”