UPDATE 1-China bought 'roughly 200 mln gallons' of U.S. ethanol for H1 2021 - ADM
(Adds details and background, adds quote)
By Karl Plume
CHICAGO, Jan 26 (Reuters) - China has bought "roughly 200 million gallons" of U.S. ethanol for the first half of 2021, matching its previous record for annual imports of the corn-based biofuel, Archer Daniels Midland Co CFO Ray Young said on Tuesday.
The accelerated imports are among several positive signs for the ethanol sector which has been hard hit by years of oversupply and, more recently, a sharp drop in demand as the coronavirus pandemic slashed fuel use.
"China actually has been buying U.S. ethanol. That's something that they have not been doing over the past couple of years," Young said on an earnings-day call with analysts.
"We do see, particularly in the area of ethanol, we see green shoots of recovery in 2021 for this business here," he said after the company reported a stronger-than-expected fourth-quarter profit on Tuesday.
China has not traditionally been a large importer of ethanol, but rising demand for renewable fuels and a smaller-than-expected domestic crop of corn used to make the biofuel has spurred need for imports.
China had planned a nationwide rollout of gasoline blend containing 10% ethanol in 2020 in a environmental push towards biofuels. But the rollout was suspended following a sharp decline in corn stocks, Reuters reported.
China's energy watchdog on Dec. 31, however, said oil and gas companies should restore supply of ethanol-blended gasoline as soon as possible, in a sign the green fuel push may be back on track.
Imports of 200 million gallons would eclipse China's previous annual import record of about 198.1 million gallons in 2016, according to U.S. Census Bureau trade data.
ADM did not disclose if it was among China's suppliers.
Valero Energy Corp is one of the companies that has sold ethanol cargoes to China, two U.S. market participants said. Valero did not immediately respond to a request for comment.
Despite the positive signs, about 10% to 15% of U.S. ethanol production capacity remains idled due to poor margins, including two dry corn mills owned by ADM. Those two mills, Young said, could restart production in the first half of this year if margins improve.
(Reporting by Karl Plume in Chicago, Additional reporting by Mark Weinraub in Chicago and Stephanie Kelly in New York Editing by Marguerita Choy)
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