Special Report: Capacity Glut Crimps New Ethanol Plants

February 22, 2008 (McLean, Va.) – The U.S. ethanol investment pullback hasn't got any worse, but judging from the dearth of new plant project announcements in recent months, it hasn't gotten any better, according to a recently analysis by Ethanol & Biodiesel News.
After outsized capacity growth throughout much of 2006 and 2007, in which 113 ethanol plants came online, many would-be developers now see the market as highly uncertain. How much past equilibrium production capacity might the U.S. be here in the first quarter of 2008?
An Ethanol & Biodiesel News examination of publicly available data shows that U.S. corn-based ethanol production capacity was a little over seven billion gallons in 2007. By the end of 2008, another six billion in capacity remains on track for completion, which would bring total capacity to about 13 billion gallons.
But the maximum amount of domestic ethanol that can be sold in 2008 is 12 billion gallons, under the federal Renewable Fuels Standard, assuming a maximum blend of 10% for E-10, which is 90% gasoline.
Given that disparity, EBN identified that 1.05 billion gallons/year of capacity from 17 producers was withdrawn or indefinitely postponed since the second half of 2007.
The suspended plants – most of which were to have been located in Iowa, Illinois, and South Dakota – also had represented attempts to break into the market by states such as New Mexico and Florida.
But many of those would-be entrants had not foreseen that the very growth of the ethanol market would effect a doubling in the cost of corn, the U.S. industry's sole viable feedstock.
Lower ethanol market clearing prices, combined with corn costs that remain not only high but highly volatile, regularly pushed plant per-gallon profits into the red by several cents per gallon, according to data tracked weekly by EBN.
At the end of this release is a table showing existing and proposed ethanol plants in the United States, including existing facilities being expanded. Those shaded in grey were recently cancelled or postponed. The table lists the owner, location and feedstock. The current capacity and capacity under construction is also listed, in millions of gallons per year.
Ethanol & Biodiesel News, a weekly subscription newsletter from Hart Energy Publishing LLLP, has been covering biofuels developments for 21 years and includes a full series of U.S. price data and analysis, plus worldwide coverage.

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This release was published on openPR.