May 29, 2020
- The Wall Street Journal
Plummeting energy demand during the coronavirus pandemic has decimated the ethanol industry. Ethanol producers such as POET LLC, Valero Energy Corp., and Archer Daniels Midland Co. have responded by cutting production or closing plants.
ADM says it has furloughed 90 employees as a result of the plant stoppages. Valero’s cuts span its 14 ethanol facilities, affecting more than 920 employees.
Dozens of other ethanol plants have made production cuts as well, said Emily Skor, chief executive officer of biofuel trade association Growth Energy. For farmers who sold corn to these ethanol plants, the closures come at a bad time. Many corn farmers struggled to stay solvent in 2019 after record rainfall delayed planting and the U.S.-China trade war weighed on commodities prices."
Here at Solvent Direct, we deal directly with the top three tiers of ethanol production in North America and the recent cuts are having a profound impact on the cost of raw material for extraction grade alcohols.
As of Friday, May 29, 2020, the cost of raw material has surged by almost 7.456%. While we are doing everything we can do to minimize the impacts of these price increases, in order to maintain our supply chain there will be temporary dynamic pricing in effect. Please contact your account manager for details.
While dynamic pricing is challenging for all of us, it is necessary in order to maintain regular business and healthy inventory levels across our distribution platform. Our sources suggest the US Grains Council Ethanol Market and Pricing Data Report will estimate material production to ramp back up sometime around June 15, 2020.
In the meantime, you can rest assured we are doing everything we can to minimize the price increases and we will continue to deliver high-purity material, on time, every time, for the lowest prices possible because the success of your business is our top priority.
To learn more about COVID-19 and how it can be prevented, visit our fact sheet