Ethanol Production Cost

Production of Ethanol, Market Prices, and Industry Overview

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Ethanol: Described

Ethanol (CH3CH2OH) or ethyl alcohol is a liquid belonging to a class of organic compounds. It has a melting and boiling point of 156K and 351 K. It is a clear and colourless liquid with a higher-octane number compared to gasoline. It is derived as a natural by-product of the plant fermentation process and can also be produced via the hydration of ethylene. It has a distinct vinous odour with a pungent taste. It has a flash point of 55 °F with a density of 6.5 lb/gal, making its vapours heavier than air.

Ethanol Properties and Applications

Ethanol can be dissolved in water and other organic compounds with ease making it a vital ingredient in several products and applications. The following end-uses include:

In Personal Care and Cosmetic Products

It is found in a range of personal care products, including as an astringent that cleanses the skin and minimises the skin’s cells and pores. It is also used as a preservative that guarantees the ingredients in creams and lotions don’t split. It is also used in hair-care products like hairspray as well as in sanitary products like hand sanitisers to kill microorganisms like bacteria and viruses.

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Application As A Solvent

Due to the properties of ethanol, like being miscible with water and being an effective solvent, it is added to products like paints, varnish, and lacquers, along with cleaning products.

Added to Food Additives

It also works as a food additive and is added to food colourings to help maintain the colour’s consistency. Along with that, it is used in a few food extracts, including vanilla extract and for improving the flavours. 

In Fuel Making

Ethanol is also used in fuels as it assists the oxygen supply to fuel while reducing emissions. It also improves the fuel’s octane number. Additionally, in Rocket Fuels, ethanol mixed with water is used to lower the combustion chamber’s temperature. 

For Alcohol Production

Ethanol is widely employed for making alcoholic beverages as it acts as an intoxicating agent in alcohol.

The Ethanol Production Routes Employing the Hydration Process/ Synthetic Route as well as Fermentation Process

  • From Hydration Process/ Synthetic Route: This method produces ethanol through the hydration process or the synthetic route. At first, Ethylene is hydrated by passing a mix of steam and Ethylene with the help of an acidic catalyst. The ethanol derived has to be purified further to obtain the final product.
  • From Fermentation Process: This method of ethanol production involves the fermentation process. In this method, carbohydrates like sugar cane, rice, and maize are used, which are converted into ethanol and carbon dioxide via fermentation. Without oxygen’s presence, it performs best at temperatures ranging from 25°C to 35° C and produces an aqueous solution. Further, higher alcohol levels demand additional distillation.

The Key Ethanol Market Players

  • Archer Daniels Midland Company
  • Cargill, Incorporated
  • CHS Inc
  • BP Plc
  • The Andersons Inc.

The Current Ethanol Price Trend Analysis Categorised by Region

North America

During the last few months, a mixed price dynamic was witnessed in the market in North America on the back of manufacturing capacity and demand strength. The prices of ethanol rose in the end since the production capacity grew, and the stock remained down. The rate of employment dropped, and the rate of inflation stayed constantly higher in the region, which influenced the definitive prices. During the food crisis, as well as an increase in the costs of energy, the feedstock (corn) prices also remained high. as per the United States Department of Agriculture (USDA), the stock expanded, During the end. The holiday season during Christmas and New Year, paired with the disturbance triggered by the storm Elliot, decreased the general market prices for ethanol. In the regional market, the Ethanol demand for gasoline production stayed moderate.

Asia Pacific

The general industry dynamics of Ethanol in the Asia-Pacific region stayed steady all through the end. The market in China saw a spike in cases of COVID infection, which hampered the domestic market’s production capacity. The country’s significant financial hubs stopped production amid the economic disturbance in the nation. Near the end, prices of Ethanol recovered as the cost of production grew. The prices of the commodity raised, and the product demand for producing biofuel turned moderate. The price of energy in the domestic market skyrocketed with the prices of coal in the Asian market all through the quarter, correspondingly affecting the last prices of Ethanol. Also, limited movement and the New year holidays in the nation affected the final cost of production for Ethanol in the market in Asia.


The market prices of Ethanol in the European market observed a northward momentum. The financial uncertainty stayed persistent in the Europe region, causing high inflation and energy rates proportionally affecting the cost of production for Ethanol. The EU concentrated further on sugar production as well as satisfying the food scarcity in the nation. Ethanol’s importing prices in the nation rose from Germany, and consumers displayed a steady market trend. With the rising prices of energy, the demand for Ethanol-blended fuel stayed at a favourable point; therefore, the ultimate prices also followed the northward momentum.

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The Latest Market Trend for Ethanol

The ethanol market is persistently developing owing to the continuous government policies for renewable fuels. However, in the current year, ethanol futures were trading below their peaks in June, pressured by the weak energy market sentiments amidst stresses over a looming recession. During the bearish market sentiment, the companies in the US opted to benefit from the low prices of ethanol by mixing all-time high quantities of fuel with gasoline.

In conclusion, the following blog post covers the various segments of ethanol. It can be seen that it is a vital commodity which is widely used for several applications like fuel, and personal care products, among others. The price analysis of the product is also covered based on the region. Hence, it can be seen that it’s sourcing across several industries is crucial. So, industry leaders need to take the right approach to procure the commodity with respect to prices, cost models, key manufacturers etc. 

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