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Red ink bleeds into ethanol mergers

A lack of profitability is leading to consolidation among ethanol refiners.

Renewable Fuels Association CEO Geoff Cooper says it’s a result of tough times for the industry.

“We have been in quite a rough patch here for a little while.”

Mergers have increased as ethanol margins thinned amid the trade war with China and RFS exemptions granted to oil companies.

Several Midwestern ethanol plants are publicly for sale, but Cooper tells Brownfield the outlook is improving.

“We are heading into the summer driving season, where we typically see the highest levels of demand on a seasonal basis. So that’s encouraging.”

He says the supply side is starting to come into a better balance with demand.

“The stocks reports from (the Energy Information Administration) have shown a reduction in stocks, so things do seem to be turning a corner. And we do seem to be in a better spot than we’ve been.”

But Cooper acknowledges the market remains down and says further consolidation and restructuring is certainly possible.