The United States is expected to ship 400,000 tonnes of ethanol to China in 2018, more than five times the amount last year, a major US producer said on Wednesday, as the country seeks to meet rising demand to match a government directive for the fuel. But imports will be curbed by the risk of an additional 15 percent tariff that Beijing may levy on the fuel as part of the escalating trade tensions between the US and China, Paul Kreter, director of fuel marketing at Marquis Energy told a conference in Beijing on Wednesday.
China mandated last September that by 2020 all gasoline supplies should contain 10 percent ethanol, an alcohol typically produced from corn, in a blend known as E10. China only produces around 2.5 million tonnes, but would need 12 million tonnes a year by the 2020 deadline, Kreter said.
Marquis reduced its estimate for Chinese imports after Beijing's warning of additional tariffs, Kreter said, without stating what the company's earlier forecast was. He said some import estimates had been as high as 800,000 tonnes for 2018. China has levied a 30 percent duty on imports of the fuel since January 2017, which had slowed trade to a trickle.
Adding a further 15 percent duty on top of current tariffs and other taxes would make the price very high, said Kreter, though he added that a resolution between the two countries may be found prior to extra tariffs being set. China's top independent oil refiner is already buying ethanol and two others are seeking government approval to blend the biofuel into their gasoline to meet the growing demand, sources recently told Reuters.
Domestic producers are also ramping up production, with one recently predicting a rise in output of 500,000 tonnes this year. Marquis also forecasts US ethanol exports to Canada this year at 1 million tonnes, up from 983,000 tonnes, while those to Brazil are likely to remain level at 1.3 million tonnes.