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Despite Phase One Deal, US Ethanol Exports to China Unlikely

Quota system, similar to US soybeans, may be implemented

Fuel pump

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.

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