The global bioethanol market is estimated at USD 53.19 Billion in 2017 and is projected to reach USD 68.95 Billion by 2022, at a CAGR of 5.3% from 2017 to 2022. The market is driven by the increased demand for bioethanol from various end-use industry segments, such as transportation, pharmaceuticals, cosmetics, alcoholic beverages, and others. The transportation end-use industry segment led the global bioethanol market, in terms of volume, in 2016.
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Starch-based feedstock is estimated to be the largest feedstock type in the global bioethanol market.
The starch-based segment is estimated to be the largest feedstock segment of the global bioethanol market. This feedstock type uses corn, barley, wheat, and other starch raw materials as feedstocks to produce bioethanol. Corn has the highest percentage of starch, about 70-72%. The growth in this segment is attributed to the rising demand from Asia Pacific and South America and the wide variety of feedstocks that can be used to produce starch-based bioethanol. The feedstocks used are available in almost all over the world.
Alcoholic beverages segment is estimated to be the fastest growing end-use industry segment of the global bioethanol market.
Among end-use industries, the alcoholic beverages segment is estimated to be the fastest growing end-use segment of the global bioethanol market. The growth of this segment is attributed to the increasing purchasing power in developing countries and the growing acceptance of drinking alcoholic beverages in some cultures.
North America contributes as the largest market of bioethanol
In 2016, North America accounted for largest share of the bioethanol market. Currently, the US is the largest market for bioethanol in North America, and is expected to continue to be the largest market till 2022. In the US, the demand for bioethanol is expected to increase due to the increasing government and environment regulations in the country. Regulations such as the Federal Reformulated Gasoline (RFG) and E15 regulations contribute to the growing use of bioethanol in fuels. The other driving factor for the bioethanol market is the low price of corn, which is a prime feedstock used in the production of bioethanol in the country. Many bioethanol manufacturers are based in this region.
Key companies profiled in the global bioethanol market research report include Archer Daniels Midland Company (US), POET LLC (US), Green Plains (US), Valero Energy Corporation (US), Flint Hills Resource (US), Abengoa Bioenergy SA (Spain), Royal Dutch Shell plc (Netherlands), Pacific Ethanol, Inc. (US), Petrobras (Brazil), and The Andersons (US).
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Headline crude prices for the week beginning 13 January 2020 – Brent: US$64/b; WTI: US$59/b
Headlines of the week
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January 2020
In its latest Short-Term Energy Outlook (STEO), released on January 14, the U.S. Energy Information Administration (EIA) forecasts that generation from natural gas-fired power plants in the electric power sector will grow by 1.3% in 2020. This growth rate would be the slowest growth rate in natural gas generation since 2017. EIA forecasts that generation from nonhydropower renewable energy sources, such as solar and wind, will grow by 15% in 2020—the fastest rate in four years. Forecast generation from coal-fired power plants declines by 13% in 2020.
During the past decade, the electric power sector has been retiring coal-fired generation plants while adding more natural gas generating capacity. In 2019, EIA estimates that 12.7 gigawatts (GW) of coal-fired capacity in the United States was retired, equivalent to 5% of the total existing coal-fired capacity at the beginning of the year. An additional 5.8 GW of U.S. coal capacity is scheduled to retire in 2020, contributing to a forecast 13% decline in coal-fired generation this year. In contrast, EIA estimates that the electric power sector has added or plans to add 11.4 GW of capacity at natural gas combined-cycle power plants in 2019 and 2020.
Generating capacity fueled by renewable energy sources, especially solar and wind, has increased steadily in recent years. EIA expects the U.S. electric power sector will add 19.3 GW of new utility-scale solar capacity in 2019 and 2020, a 65% increase from 2018 capacity levels. EIA expects a 32% increase of new wind capacity—or nearly 30 GW—to be installed in 2019 and 2020. Much of this new renewables capacity comes online at the end of the year, which affects generation trends in the following year.
Forecast generation mix varies in each of the 11 STEO electricity supply regions. A large proportion of the retired coal-fired capacity is located in the mid-Atlantic area, where PJM manages the dispatch of electricity. EIA forecasts that coal generation in the mid-Atlantic will decline by 37 billion kilowatthours (kWh) in 2020. Some of this decline is offset by more generation from mid-Atlantic natural gas-fired power plants; EIA expects generation from these plants to grow by 23 billion kWh.
Source: U.S. Energy Information Administration, Short-Term Energy Outlook, January 2020
In the Midwest, where the Midcontinent ISO (MISO) manages electricity, EIA expects coal generation to fall in 2020 by 33 billion kWh. This decline is offset by an increase in natural gas electricity generation (12 billion kWh) and by nonhydropower renewable energy sources (13 billion kWh). The regional increase in renewables is primarily a result of new wind generating capacity.
The electric power sector in the area of Texas managed by the Electric Reliability Council of Texas (ERCOT) is planning to see large increases in generating capacity from both wind and solar. EIA expects this new capacity will increase generation from nonhydropower renewable energy sources by 24 billion kWh this year. EIA expects the increased ERCOT renewable generation will lead to a regional decline of natural gas-fired generation and coal generation of 14 billion kWh for each fuel source in 2020.
EIA expects these trends to continue into 2021. EIA forecasts U.S. generation from nonhydropower renewable energy sources will grow by 17% next year as the electric power sector continues expanding solar and wind capacity. This increase in renewables, along with forecast increases in natural gas fuel costs, contributes to EIA’s forecast of a 2.3% decline in natural gas-fired generation in 2021. U.S. coal generation in 2021 is forecast to fall by 3.2%.
In the U.S. Energy Information Administration’s (EIA) January Short-Term Energy Outlook (STEO), EIA forecasts that the Brent crude oil spot price will average $65 per barrel (b) in 2020 and $68/b in 2021 (Figure 1). EIA forecasts that the West Texas Intermediate (WTI) spot price will average $59/b in 2020 and $62/b in 2021. EIA forecasts that crude oil prices will remain elevated in the first few months of 2020, reflecting a price premium on crude oil from recent geopolitical events. However, this price premium will diminish in the first half of 2020 and market fundamentals will drive the crude oil price forecast in the second half of 2020 and in 2021.
Several geopolitical events have provided upward pressure on crude oil prices in recent months. These events include attacks on oil tankers transiting the Persian Gulf and the Red Sea, the September 2019 attack on Saudi Arabia’s energy infrastructure, and recent tensions between the United States and Iran.
Although the immediate price spike following the mid-September attacks on Saudi Arabia was relatively short-lived, the attacks contributed to increased price risk. As a result, monthly average Brent prices rose from $63/b in September to $67/b in December. Crude oil prices increased during this period despite global liquid fuels inventories growing by 130,000 barrels per day (b/d). Further increasing the geopolitical risk premium on global oil prices, the U.S. military action in Iraq in January 2020 increased uncertainty about potential disruptions to oil production and shipping in the Middle East. Following these developments, the price of Brent crude oil reached $70/b, but prices have subsequently fallen.
As the risk premium decreases, EIA assumes that Brent prices will decline in early 2020 to an average of $62/b in May. EIA does not forecast supply disruptions, and any physical supply disruptions would put upward pressure on prices.
In the first half of 2020, EIA expects significant liquid fuels supply growth. Production restraint from members of the Organization of the Petroleum Exporting Countries (OPEC) and several non-member countries (OPEC+), most notably Russia, and accelerating global demand growth will be more than offset by non-OPEC production, largely in the United States, Norway, Brazil, and Canada. EIA forecasts an average global stock build of 520,000 b/d in the first half of the year, which will put downward pressure on crude oil prices (Figure 2). However, later in 2020 and in 2021, non-OPEC production growth (particularly from U.S. tight oil) will slow significantly, which will contribute to tightening market balances and upward pressure on crude oil prices. Although the pace of global economic growth and resulting changes to oil consumption remain uncertain, EIA expects liquid fuels consumption growth to increase from 2019 levels.
In December, OPEC+ announced an agreement to deepen production cuts through March 2020. The group is now targeting production that is 1.7 million b/d lower than in October 2018, compared with the former target reduction of 1.2 million b/d. EIA forecasts that 2020 OPEC crude oil production will average 29.2 million b/d and 2021 production will average 29.3 million b/d, down from an average of 29.8 million b/d in 2019. In the forecast, OPEC production remains lower than 2019 levels because EIA assumes that OPEC will limit production through all of 2020 and 2021 to maintain balanced global oil markets and because of continuing production declines in Venezuela and Iran.
The crude oil price forecast is also driven by a forecast that global economic growth will be higher in 2020 than in 2019. Based on forecasts from Oxford Economics, EIA adjusted its global oil-weighted gross domestic product (GDP) growth forecast for 2020 up slightly to 2.4% and further to almost 3.0% in 2021, up from GDP growth of 1.9% in 2019. EIA forecasts that global liquid fuels consumption will increase by 1.3 million b/d in 2020 and 1.4 million b/d in 2021. On December 13, the Office of the United States Trade Representative announced that the United States and China reached an agreement for a trade deal, which was signed on January 15. Global trade conditions are among the many factors that may influence the pace of economic growth in the coming quarters.
EIA forecasts that non-OPEC liquid fuels production will increase by 2.6 million b/d in 2020 and by 0.9 million b/d in 2021. Growth in 2020 is largely driven by production increases in the United States, Norway, Brazil, and Canada. Total U.S. liquid fuels production is forecast to increase by 1.7 million b/d in 2020, but production growth slows to 0.6 million b/d in 2021. Most U.S. liquids production growth is from crude oil, which will grow by 1.1 million b/d in 2020 and by 0.4 million b/d in 2021. EIA expects that crude oil production growth will slow as a result of declining rig counts. However, EIA forecasts that production will continue to grow as a result of rig efficiency and well productivity that is expected to rise during the forecast period.
EIA forecasts that combined liquids production in Norway, Brazil, and Canada will grow, averaging 860,000 b/d in 2020 and 450,000 b/d in 2021. In Norway, Phase 1 of the Johan Sverdrup field came online in October 2019 and EIA forecasts that it will drive most of Norway’s production growth during the forecast period. In Brazil, seven floating production, storage, and offloading vessels (FPSO) came online in 2018 and 2019 and are now producing at maximum or near maximum capacity. FPSOs will continue to be the main driver of growth in Brazil; at least four more are expected online through 2023. EIA expects that Canada’s production growth will accelerate compared with 2019 as the Alberta government’s production curtailments are reduced and more rail takeaway capacity gives producers an outlet for supplies.
U.S. average regular gasoline and diesel prices decline
The U.S. average regular gasoline retail price fell nearly 1 cent from the previous week to $2.57 per gallon on January 13, 32 cents higher than the same time last year. The Rocky Mountain price fell more than 3 cents to $2.61 per gallon, the East Coast price declined 2 cents to $2.52 per gallon, the West Coast price fell nearly 1 cent to $3.20 per gallon, and the Gulf Coast price fell less than 1 cent, remaining at $2.28 per gallon. The Midwest price rose nearly 1 cent to $2.44 per gallon.
The U.S. average diesel fuel price fell nearly 2 cents from the previous week to $3.06 per gallon on January 13, 9 cents higher than a year ago. The Rocky Mountain price fell nearly 4 cents to $3.07 per gallon, the West Coast price fell more than 2 cents to $3.59 per gallon, the Gulf Coast price fell nearly 2 cents to $2.81 per gallon, the Midwest price fell more than 1 cent to $2.97 per gallon, and the East Coast price fell nearly 1 cent to $3.11 per gallon.
Propane/propylene inventories decline
U.S. propane/propylene stocks decreased by 0.9 million barrels last week to 87.9 million barrels as of January 10, 2020, 15.0 million barrels (20.6%) greater than the five-year (2015-19) average inventory levels for this same time of year. Gulf Coast, East Coast, and Midwest inventories decreased by 0.4 million barrels, 0.3 million barrels, and 0.2 million barrels, respectively. Rocky Mountain/West Coast inventories remained unchanged. Propylene non-fuel-use inventories represented 7.0% of total propane/propylene inventories.
Residential heating oil prices decrease, propane prices increase
As of January 13, 2020, residential heating oil prices averaged nearly $3.11 per gallon, 1 cent per gallon below last week’s price and 3 cents per gallon lower than last year’s price at this time. Wholesale heating oil prices averaged more than $2.03 per gallon, almost 14 cents per gallon lower than last week’s price but more than 5 cents per gallon higher than a year ago.
Residential propane prices averaged almost $2.01 per gallon, less than 1 cent per gallon above last week’s price but nearly 42 cents per gallon less than a year ago. Wholesale propane prices averaged $0.64 per gallon, 2 cents per gallon lower than last week’s price and more than 14 cents per gallon below last year’s price.