An easing of trade tensions between the US and China could pave the way for a resumption China's imports of US ethanol in 2020 -- although this is currently unviable even if tariffs are lowered, reports S&P Global Platts.
It is possible -- but unlikely -- that the Chinese government will allow cheaper US ethanol imports to surge into the country by lowering the tariff back below 30%, as this would destroy its fledgling domestic ethanol industry.
What could happen instead is the introduction of a quota system -- similar to that for US soybeans -- under which a set volume of ethanol from the US would be allowed in "at a preferred tariff" level, a market source said.
Either way, ethanol is expected to be included in the phase one US-China trade agreement in order for China to reach its required $40 billion-$50 billion of purchases under the deal.
Read the full report here.
