U.S. fuel ethanol producer and refiner Valero is shutting down two of its ethanol plants, one in Nebraska and the other in Iowa. They’re also declaring “force majeure” on shipments for dried distillers’ grains or corn purchases, which means they won’t be able to meet contracted demands because of unforeseeable conditions.
The force majeure is because of a lack of storage availability for corn or ethanol as demand for fuel drops and storage remains limited due to the excess supply. The coronavirus outbreak is causing Americans to drive considerably less than usual, so the low demand and excess supply are forcing Valero to close plants in Albion, Nebraska, and Albert City, Iowa.
An Independent Commodity Intelligence Services website article says the supply of fuel ethanol remains ample while some producers are switching to industrial ethanol production as demand from that sector continues to climb. The state of the summer driving season is also uncertain, which is limiting fuel demand. The peak demand for fuel ethanol is during the summer.
Fuel ethanol demand is almost cut in half as the people who account for 45 percent of the overall demand are currently on stay-at-home-orders in the U.S., with those order numbers continuing to climb.