U.S. ethanol producers painted a bleak picture in quarterly filings and analyst calls this week, detailing how the industry has been hit by the U.S.-China trade war with China and biofuels management policies they say have tilted toward oil refiners.
Green Plains (NASDAQ:GPRE) reported an unadjusted Q3 loss of $12.5M and said it has idled plants to trim soaring inventories and boost margins.
GPRE CEO Todd Becker noted that China had been expected to import 200M gallons of ethanol this year but has been out of the market for months because of the trade war; Chinese buying would wipe out the ~120M gallon U.S. supply glut, he says.
The ethanol industry "is in a negative margin position. I wouldn’t say there are many plants that would be positive, even our best plants," Becker said.
Pacific Ethanol (NASDAQ:PEIX), which recorded a $7.5M Q3 loss, said it idled 10% of its production capacity to battle high inventories and slumping margins.
PEIX CEO Neil Koehler warned the economic run cuts likely will last into next year and may be expanded.
Archer Daniels Midland (NYSE:ADM) CEO Juan Luciano said the company performed well in Q3, but "the issue continues to be ethanol. And recently we have seen people [taking] some capacity down, but probably still not enough."
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