China suspends ethanol mandate, likely reducing need for US biofuel imports under trade war deal
- New programme was suspended after a sharp drop in national corn stocks and limited production capacity for the biofuel
- The US had expected China to buy large quantities of ethanol as part of phase one trade deal agreement to double imports over two years
China has suspended its plan to implement a nationwide petrol blend containing 10 per cent ethanol this year, three sources briefed on the matter said, after a sharp decline in the country’s corn stocks and limited production capacity of the biofuel.
Beijing announced in September 2017 that the national petrol supply would contain 10 per cent ethanol from 2020, part of a broad reform of its corn industry that at the time was suffering from a huge surplus.
But at a meeting in late December with ethanol producers and oil majors, China’s National Development and Reform Commission (NDRC) said it would be halting the roll-out of ethanol-gasoline supplies beyond the current handful of provinces that have already implemented full or partial blends, according to two of the three sources briefed on the meeting.
The decision was made after further study, which suggests any promotion of ethanol gasoline must be based on the precondition that food security is guaranteed
The reversal is a heavy blow to domestic producers that have built new plants, as well as biofuel exporters, including the United States and Brazil, which were looking to benefit from growing Chinese demand.
