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Us Ethanol Industry Analysis

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Analysis of Ethanol industry- Ethanol Basic- Global Overview of Ethanol Production- Ethanol Production Statistics- US Ethanol Industry: Historical Growth- Ethanol Production: Value Chain- Ethanol …

Analysis of Ethanol industry- Ethanol Basic- Global Overview of Ethanol Production- Ethanol Production Statistics- US Ethanol Industry: Historical Growth- Ethanol Production: Value Chain- Ethanol Production Summary: 2011-Ethanol Import and export-SWOT Analysis: Strength (Partial…)-SWOT Analysis: Weakness (Partial…)-SWOT Analysis: Opportunity (Partial…)-SWOT Analysis: Threats(Partial…)

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  • 1. US Ethanol Industry Analysis ‐ Sri Krishna ConsultingDisclaimerThe information, opinions, estimates and forecasts contained in this document have been arrived at or obtained from public sources believed to be reliableand in good faith which has not been independently verified and no warranty, express or implied, is made as to their accuracy, completeness or correctness.© 2012-20013, SKC. All rights reserved. This material is exclusive property of SKC. No part of this presentation may be used or shared or 1modified without explicit written permission of SKC.
  • 2. Content This sample is an abridged version of a Customized project done for one of our clients To protect our clients. client’s interests, several important data points, analysis and key recommendations have not been included in this document. For more information about this sample and our other services, please write to info@srikrishnaconsulting.com Or Visit Our Website: www.srikrishnaconsulting.com No. Topic Slide 1. Ethanol Basic 3 2. Global Overview of Ethanol Production 4 3. Ethanol Production Statistics 5 4. US Ethanol Industry: Historical Growth 6 5. Ethanol Production: Value Chain 7 6. Ethanol Production Summary: 2011 8 7. Ethanol Import and export 9 8. SWOT Analysis: Strength (Partial…) 10 9. SWOT Analysis: Weakness (Partial…) 11 10. SWOT Analysis: Opportunity (Partial…) 12 11. SWOT Analysis: Threats(Partial…) 13 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com
  • 3. Basics of Ethanol Ethanol is a renewable fuel made from various plant materials. The use of ethanol is widespread‐ almost 95% of gasoline in the U.S. contains ethanol in a low‐level blend or E10 ethanol blends (10% ethanol). More than 9 million consumers driving flex‐fuel vehicles, or FFVs, can use any blend of ethanol from E10 up to E85 (85% ethanol). Facts: Ethanol reduces Gasoline usage and dependency on imported oil. It helps to reduce dangerous emission caused by gasoline. It helps to improve engine performance. Ethanol has octane rating of 113. Lowering petroleum cost; According to RFA, American household is saving approximately $200‐ gp ; g , g pp y$ 400 per year on gasoline because of ethanols inclusion in the U.S. fuel supply. Ethanol also helps in creating domestic job. According to RFA, in 2011, the U.S. ethanol industry supported 90,200 direct jobs and 311,400 indirect jobs all across the country. Ethanol Manufacturing Process: There are two production processes: wet milling and dry milling. The main difference between the two is in the initial treatment of the grain grain. 3 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com
  • 4. Global Overview of Ethanol Production Global Ethanol Production in 2011 (Millions  Top Five Ethanol Producing Countries in  of Gallons) 2011 (Millions of Gallons) Europe Asia Africa Australia European  5% 4% 0% 0% Union China h 5% Canada 3% 2% South  America Brazil 26% 26% North and  Central  America USA 65% 64% American continent controls over USA is the top producer, Consumer 91% of world Ethanol production. and exporter of Ethanol. USA and Brazil control over 90% of global Ethanol production. 4 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com
  • 5. Ethanol Production Statistics Key Production Statistics Number of Operating Plants 209 Production Capacity 14.9 billion gallons Capacity under Construction 140 million gallons States with Ethanol Facility States with Ethanol Facility 29 Historical Ethanol Production (in  Top 5 Ethanol Producing State (in  millions of gallons) illi f ll ) millions of gallons) millions of gallons) 16,000 4000 14,000 3500 12,000 3000 10,000 2500 8,000 2000 6,000 1500 4,000 1000 2,000 500 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 5 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com
  • 6. US Ethanol Industry: Historical Growth Production Capacity and Plant Capacity Expansion 16000 250 6000 80 14000 5000 70 12000 200 60 4000 10000 150 50 8000 3000 40 6000 100 2000 30 4000 50 20 2000 1000 10 0 0 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Ethanol Production Capacity  (in millions  Ethanol Production Capacity (in millions of gallons)  Total Ethanol Plants Capacity Under Construction/Expanding   ( (in millions of gallons)  g ) States with Ethanol Plants Plants Under Construction 6 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com
  • 7. Ethanol Production: Value Chain Direct  Production 5 billion gross  13.9 billion bushels of corn gallons of Ethanol ll f Eth l 35.7 million metric tons of distillers grains Co‐ Products 39 2.9 million tons of corn gluten feed million metric tons  of livestock feed. 0.6 million tons of corn gluten meal t f l t l The average dry mill today uses less than 26,000 BTUs of thermal energy to produce a gallon of ethanol, compared to the 77,000 BTUs of energy contained in the gallon. The average dry mill ethanol bio‐refinery uses 47% less water per gallon than in 2001. Ethanol yields between 1.9 and 2.3 units of energy for every one unit of energy used in production, according to USDA research. 7 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com
  • 8. Ethanol Production Summary: 2011 Ethanol Production Gasoline Demand Ethanol Production % of  ( (1000s Gallons) ) ( (1000s Gallons) ) Gasoline Demand (1000s Gallons) 1963122 19516350 10.05% Corn Use Co‐Product Output (metric tons) (1000s Bu  Used) 708709 Distillers  Corn Gluten  Corn Gluten  Corn Oil (lbs.) Grains Feed Meal 4674338 504404 93408 205063136 8 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com
  • 9. Ethanol Import and export Ethanol Imports (in millions of  Ethanol Exports (in millions of gallons) gallons) 1200 700 1100 600 600 1000 500 435.2 435 2 800 400 600 300 396 193.7 193 7 400 200 160 200 150.2 157.7 100 113.3 10 0 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 9 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com
  • 10. SWOT Analysis: Strength I. A good substitute of Gasoline: Ethanol is a major substitute of Gasoline. U.S. gasoline consumption would drop by 12 percent for more use of Ethanol. The market for ethanol as a direct gasoline substitute is small but growing rapidly. Stimulated by rising gasoline prices and supported by federal, state, and local subsidies for alternative‐fuel vehicles and infrastructure, the number of retail stations offering E85—an alternative fuel blend of 85% ethanol and 15% gasoline—more than doubled during 2006–2009 to over 1900 stations nationwide. In 2007 to 2010, the share of ethanol in global gasoline type fuel use increased from 3.7% to 7.4 II. Ethanol Reducing the dependency on imported oil: Ethanol remains the only domestic renewable fuel that is meaningfully reducing America’s dependence on foreign oil. In 2011, American ethanol use helped reduce the need for imported oil by 485 million barrels. That is roughly the equivalent of 13% of total U.S. crude oil imports, saving the American economy $49.7 billion. III. Ethanol Reduces Air Pollution and Greenhouse Gas Emissions: Ethanol has a high octane number which causes it to burn in a greener way, i.e. more efficiently causing less pollution. Ethanol was primarily used as an additive in gasoline to increase its octane number for better combustion. Corn ethanol reduces GHG emissions by 30‐50% compared to average gasoline. Even when hypothetical land use change emissions are included, today’s average corn ethanol is 25% better than gasoline. Global warming is one of the prime aspects in evaluating technologies and ethanol d h l d h l does well in this regard. E10 reduces greenhouse gas emissions b ll h d d h by from zero to 5 percent and pure ethanol by 12 percent. Ethanol help reduce the use of cancer‐ causing gasoline compounds such as benzene, toluene, xylene, and ethyl benzene. 10 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com
  • 11. SWOT Analysis: Weakness I. Less availability of ethanol filling stations: Ethanol technology is that E85 fuel is not easily available in USA. E85 is available at nearly 2,000 locations nationwide. These stations are mainly located around the corn fields in the Midwest or near other areas with ethanol production as c compared with 160,000 retail gasoline stations across the country, the overall number of stations offering E85 is low. II. High vapor pressures: E85 fuel which is a blend of 85% ethanol and 15% gasoline has higher emissions of volatile organic vapors. Combustion of ethanol releases more organic vapors like acetaldehyde, formaldehyde compared to gasoline. III. Lack of pan America presence: Only 29 states produce Ethanol, so pan America Ethanol presence is challenging due to anti‐ethanol movement. IV. High distribution cost: Unlike gasoline, ethanol can’t be transported via pipeline since it picks up excess water and impurities along the line causing it to degrade. It has to be transported through trucks and barge making it very expensive. 11 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com
  • 12. SWOT Analysis: Opportunity I. Expanding domestic market: In January 2011, the U.S. Environmental Protection Agency (EPA) approved the use of E15 (15% ethanol, 85% gasoline) fuel in vehicles models of year 2001 and newer, representing 62% of the light duty vehicles on the road today. A nationwide E15 market would represent nearly 20 billion gallons of annual ethanol demand. II. Increasing export: Ethanol is increasingly becoming a global commodity. Global ethanol production and demand is way up, with the U.S. now the world’s top producer, consumer, and exporter of fuel ethanol. 2011 was a record year for U.S. fuel exports. American producers sent 1.1 billion gallons of denatured and undenatured ethanol to overseas markets. Additional, The US exported approx 8 million metric tons of live stock feed, a co‐product of Ethanol. III. New distribution infrastructure: Blend Your Own (BYO) campaign gives American drivers a wide range of choice of Ethanol blend from E10 to E85. Through the expanded installation of blender pumps and a greater proliferation of flex fuel vehicles, higher level ethanol blends will give consumers a real choice at the pump while making America less vulnerable to the vagaries of the world oil market. 12 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com ©S iK i h C lti Pl it f i f ti i f @ ik i h lti | ik i h lti
  • 13. SWOT Analysis: Threats I. Lack of distribution infrastructure: Ethanol requires more specific distribution logistic as unlike gasoline Ethanol cannot be distributed through pipeline. Lack of distribution infrastructure is major challenge for Ethanol industry. II. Anti‐ Ethanol movement: Anti ethanol movement is also effecting the Ethanol industry growth. From efforts to ban ethanol in New Hampshire to labeling concerns in Nebraska to a repeal threat of the Florida Renewable Fuel Standard, anti‐ethanol interests are motivating their state affiliates in an effort to dismantle domestic ethanol production from the ground up. Usage of more corn and water for Ethanol production is creating more buzz for anti ethanol interest. III. Increasing corn price: Another threat to this technology is the increasing price of corn. Heavy demand for corn due to rising ethanol production is driving the cost of corn out of the affordable range of common people. Food prices with energy/fuel prices that can create cross market competition which drives food prices up. IV. Threats from European Union: The most pressing trade issue for U.S. ethanol producers and marketers is the antidumping and countervailing duties investigations initiated by the European Commission (EC). This is an important issue for U.S. ethanol producers as export markets have emerged as welcomed opportunities for domestically produced ethanol. 13 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com
  • 14. About Sri Krishna Consulting Are you looking for an research and analytics partner who can… Help you get market and industry information faster? Make your competitors profiles to enhance your competitive strategy? Search information and data for your business plan? Make your business plan report and financial projection? Do equity, commodity and Forex research for your investment? And lots more….. If so, your answer is Sri Krishna Consulting. We’re here to help you cut costs, focus on your core business, and nimbly respond to growth opportunities. Our expert teams can delivers excellent Business Research, Financial Research and Data Analytics to suit your business need. b i d Right since our foundation, we have always made efforts towards meeting our work philosophy of achieving excellence in each part of our consulting capability and become the primary solution providers of competitive, efficient as well as reliable resources. With systems‐driven processes, emphasis on quality products delivered on time, and constant innovation to y p , p q yp , deliver greater value to our clients we attempt to not just meet but exceed client expectations. Our Value Proposition: High Quality and Cost Effective Research and Analytics Our Value Proposition: High Quality and Cost Effective Research and AnalyticsSri Krishna Consulting works as your Global Knowledge Partner. We provide a range of custom research, analytics Services,  supporting our Clients around the world.  Our analysts are highly educated professionals and include MBA’s, Engineers,  Statisticians, CA’s, CFA’s and industry specialists. 14 © Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com
  • 15. We Are Always Open For A Free Trial END 15© Sri Krishna Consulting. Please write us for more information: info@srikrishnaconsulting.com |www.srikrishnaconsulting.com