2015 Global Ethanol Outlook

Green Pool Commodity Specialists

9th February 2015

Alister Smith

Green Pool Commodity Specialists

• Relatively new company started late 2011

• Based in Brisbane, Australia

• 4 market analysts (+ 1 in Europe ), 1 agronomist, support

• Focus on global sugar, ethanol, biofuel feed-stocks

• Client base: 90% international/10% Australian clients are

producers, traders, processors, manufacturers, banks, funds

• Output price reports, analysis, consultancy, statistics re

market, balances, trade-flows etc

• Previously analytical division of Kingsman SA long term

experience in sugar/biofuels/commodities/consultancy

Global Ethanol Balance Key Factors

• Market transitioning from surplus (2014) to deficit (2015)

• US output sharply rising & it remains the dominant exporter

• EU production supported but decline in demand may ease

•

support the market

• Asia remains the key deficit region with increasing

competition to supply markets

Global Outlook

2013 2014 % 2015 %

Production 106,100 111,334 +4.9% 112,444 +1.0%

Consumption 104,380 109,379 +4.8% 113,663 +3.9%

Fuel 84,474 89,186 +5.6% 93,433 +4.8%

Non-fuel 19,906 20,193 +1.4% 20,230 +0.2%

Surplus - Deficit 1,720 1,955 1,219 -

Imports 11,964 10,584 -11.5% 11,421 +7.9%

Exports 12,228 11,301 -7.6% 11,147 -1.4%

Annual Global Ethanol Balances (mln L)

-

25

50

75

100

125

2013 2014 2015

Production Non-Fuel Fuel

Global: Ethanol Market Balance

bln L

2015 regional supply & demand

2015 Quarterly Breakdown

-

10

20

30

40

Q1 2015 Q2 2015 Q3 2015 Q4 2015

Production Non-fuel Fuel

Global Ethanol Market Balancebln L

Fuel Non-fuel Import Export

22,257 22,077 5,165 2,913 2,870 - 4,943

29,034 23,480 4,848 2,905 2,785 827

31,879 23,629 4,712 2,746 2,572 3,711

29,472 23,867 5,533 2,741 2,704 108

112,641 93,053 20,257 11,304 10,932 - 297

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Total 2015

ProdnConsumption Trade

Stock ∆

Brazil demand grows but production steady

2013 2014 2015

Production 27,397 27,809 28,336

Consumption 22,613 26,185 29,300

Fuel 20,441 24,030 27,188

Non-fuel 2,172 2,155 2,112

Trade

Import 189 451 730

Export 3,100 1,500 1,003 -

5

10

15

20

25

30

35

2013 2014 2015

Production Non-fuel Fuel

Brazil: Ethanol Market Balance

bln L

-5%

0%

5%

10%

15%

20%

25%

0

5

10

15

20

25

30

05 06 07 08 09 10 11 12 13 14

Brazil: Gasoline Market

Tot. Gas/Eth Sales Ann'l Growth (LHS)

mln bpe annual growth

1. Overall recovery in fuel market growth

-

20

40

60

80

100

120

140

0%

10%

20%

30%

40%

50%

60%

Jan

00

Jun

01

No

v 0

2

Ap

r 0

4

Se

p 0

5

Fe

b 0

7

Jul 0

8

De

c 0

9

Ma

y 1

1

Oc

t 12

Ma

r 14

Minas Gerais Vol (RHS)

Minas Gerais

Sao Paulo

Minas Gerais: Hydrous Sales

% Tot. Gasoline Mkt mln L

2. ICMS Tax Changes in Minas Gerais

3. Increase in Anhydrous Blend Rate from 25% to 27%

from Feb/Mar 15

4. Re-introduction of CIDE Tax on Gasoline C

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

11 12 13 14 15 16

at 27% at 25%

bln L

Brazil: Mthly Anhdyrous Demand

0%

10%

20%

30%

40%

50%

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Volume (LHS)Market Share

bln L

Brazil: Mthly Hydrous Demand

Exports fade and imports grow

-1,250

-1,000

-750

-500

-250

0

250

500

750

1,000

1,250-1250

-1000

-750

-500

-250

0

250

500

750

1000

1250

Q1

13

Q2

13

Q3

13

Q4

13

Q1

14

Q2

14

Q3

14

Q4

14

Q1

15

Q2

15

Q3

15

Q4

15

Imports Exports

Brazil: Quarterly Ethanol Trade

mln Lmln L

0

100

200

300

400

500

Jan

10A

pr 10

Jul 10

Oc

t 10Ja

n 11

Ap

r 11Ju

l 11O

ct 11

Jan

12A

pr 12

Jul 12

Oc

t 12Ja

n 13

Ap

r 13Ju

l 13O

ct 13

Jan

14A

pr 14

Jul 14

Oc

t 14

Th

ou

san

ds

mln L

Brazilian Ethanol Exports

Other EuropeMid EastEU 27E AsiaS AsiaCBINth America

USA demand grows but production steady

2013 2014 2015

Production 51,868 55,762 55,835

Consumption 51,441 51,747 52,238

Fuel 49,866 50,148 50,590

Non-fuel 1,575 1,599 1,648

Trade

Import 1,514 294 590

Export 2,703 3,549 3,943 -

10

20

30

40

50

60

70

2013 2014 2015

Production Non-fuel Fuel

US: Ethanol Market Balance

bln L

Output is Margin Driven

1. Corn Input Prices Remain Near Historical Lows

2. Ethanol Returns at 9½ year Lows

3. Margins are no longer conducive to further growth

4. Stocks only now starting to build

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.02

00

7

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

$/buPrompt CBOT Corn Futures

1.00

2.00

3.00

4.00

5.00

Jan

14

Fe

b 1

4

Ma

r 14

Ap

r 14

Ma

y 1

4

Jun

14

Jul 1

4

Au

g 1

4

Se

p 1

4

Oc

t 14

No

v 1

4

De

c 1

4

Jan

15

Argo ITT NYH Barges

Houston Rail Los Angeles

US National Ethanol Prices$/gal

US National Ethanol Prices$/gal

750

800

850

900

950

1,000

1,050

-0.50

0.00

0.50

1.00

1.50

2.00

Jan

11A

pr 11

Jul 11

Oc

t 11Ja

n 12

Ap

r 12Ju

l 12O

ct 12

Jan

13A

pr 13

Jul 13

Oc

t 13Ja

n 14

Ap

r 14Ju

l 14O

ct 14

Jan

15

Ethanol Profit Margins vs Prod'n

Margin Over Tot. Cost

Weekly Prod'n (RHS)

$/gal '000 bbl

12

14

16

18

20

22

24

26

700

750

800

850

900

950

1,000

1,050

Jan

12

Ma

y 1

2

Se

p 1

2

Jan

13

Ma

y 1

3

Se

p 1

3

Jan

14

Ma

y 1

4

Se

p 1

4

Jan

15

mln bbl

US Weekly Ethanol S & D vs Stocks

Stocks (RHS) Blender Inputs

Production

'000 bpd

Exports grow and imports fade

-1,250

-1,000

-750

-500

-250

0

250

500

750

1,000

1,250-1250

-1000

-750

-500

-250

0

250

500

750

1000

1250

Q1

13

Q2

13

Q3

13

Q4

13

Q1

14

Q2

14

Q3

14

Q4

14

Q1

15

Q2

15

Q3

15

Q4

15

Imports Exports

US: Quarterly Ethanol Trade

mln L

-

200

400

600

800

Jan

09

Jul 0

9

Jan

10

Jul 10

Jan

11

Jul 11

Jan

12

Jul 12

Jan

13

Jul 13

Jan

14

Jul 14

Nth America

Mid East

Europe

Asia

Lat America

Africa

US Ethanol Exports by Destination

mln L

EU-28 a shrinking market

2013 2014 2015

Production 6,616 7,069 7,301

Consumption 7,941 7,787 7,854

Fuel 5,408 5,257 5,256

Non-fuel 2,533 2,530 2,597

Trade

Import 5,457 4,795 4,648

Export 3,879 4,079 4,091 -

1

2

3

4

5

6

7

8

9

2013 2014 2015

Production Non-fuel Fuel

EU 28: Ethanol Market Balancebln L

Production Pressure as Demand Declines

1. Grain Prices Rebounding 2. Crush Margins Under

Pressure

3. Gasoline Demand is in Decline

4. Discretionary Demand Under Pressure

-300

-200

-100

0

100

200

300

400

450

500

550

600

650

700

No

v 12

Fe

b 13

Ma

y 13

Au

g 13

No

v 13

Fe

b 14

Ma

y 14

Au

g 14

No

v 14

/mt

EU: T2 Price & Crush Margins

Crush Margin - CornCrush Margin - WheatFOB T2 (LHS)

/m3

125

150

175

200

225

250

275

Jan

13

Ma

r 13

Ma

y 1

3

Jul 1

3

Se

p 1

3

No

v 1

3

Jan

14

Ma

r 14

Ma

y 1

4

Jul 1

4

Se

p 1

4

No

v 1

4

Jan

15

Maize Wheat

/mt

Prompt EU Wheat and Maize Prices

0

2

4

6

8

10

Jan

10

Jul 1

0

Jan

11

Jul 1

1

Jan

12

Jul 1

2

Jan

13

Jul 1

3

Jan

14

Jul 1

4

UK

Sweden

Spain

Portugal

Norway

Netherlands

Latvia

Italy

Ireland

Germany

France

Denmark

#REF!

Austria

Gasoline Use in Selected EU Countries

bln L

-

5

10

15

20

25

30

8

10

12

14

16

18

Jan

12

Ma

r 12

Ma

y 1

2Ju

l 12

Se

p 1

2N

ov

12

Jan

13

Ma

r 13

Ma

y 1

3Ju

l 13

Se

p 1

3N

ov

13

Jan

14

Ma

r 14

Ma

y 1

4Ju

l 14

Se

p 1

4N

ov

14

Sweden - E85 & Bensin Prices

E85 use Bensin 95 E85

SEK/L mln L

Exports grow and imports fade

-

25

50

75

100

125

10 11 12 13 14

All Others

Other GSP Plus

Bolivia

Peru

Guatemala

Pakistan

GSP

EBA

EU Imports by Duty Access

mln L

0

10

20

30

40

50

60

70

80

Jan

12

Ma

r 12

Ma

y 1

2Ju

l 12

Se

p 1

2N

ov

12

Jan

13

Ma

r 13

Ma

y 1

3Ju

l 13

Se

p 1

3N

ov

13

Jan

14

Ma

r 14

Ma

y 1

4Ju

l 14

Se

p 1

4

Africa

Asia

Middle East

North America

Latin America

Other Europe

Other

EU28: Exports by Regionmln L

Asia Pacific the deficit grows

2013 2014 2015

Production 13,744 13,879 13,950

Consumption 14,399 15,133 15,497

Fuel 4,596 5,220 5,599

Non-fuel 9,804 9,913 9,898

Trade

Import 1,817 2,060 2,478

Export 1,111 940 905 0

5

10

15

20

2013 2014 2015

Production Non-fuel Fuel

Asia Pacific: Ethanol Market Balance

bln L

2015 Asian ethanol supply & demand

Pakistan trade under pressure

-

10

20

30

40

50

60

70

80

Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14

Other EuropeAfricaEast Asia & OceaniaEUMiddle East

Pakistan Ethanol Exports mln L

1.50

1.75

2.00

2.25

2.50

2.75

3.00

80

85

90

95

100

105

110

Jan

12

Ap

r12

Jul1

2

Oc

t12

Jan

13

Ap

r13

Jul1

3

Oc

t13

Jan

14

Ap

r14

Jul1

4

Oc

t14

Jan

15

USD/BRL

Pakistan Rupee and Brazilian Real

USD/PKR USD/BRL

USD/PKR

Japan - ethanol demand rising

2012

578 mln L +2.7%

2013 2014*

591 mln L +1.9%

576 mln L +10.1% (Jan Nov)

Brazil

291

50%

USA

30

5%

Pakistan

133

23%

Other Asia

123

21%

Brazil

342

58%

USA

10

2%

Pakistan

126

21%

Other Asia

112

19%

Brazil

408

71%

USA

38

6%

Pakistan

91

16%

Other Asia

33

6%

Other

6

1%

Korean origins are shifting

2012

284 mln L +5.7%

2013 2014

265 mln L -6.7%

373 mln L +14.7%

Brazil

68

24%

USA

26

9%

Pakistan

89

31%

Other

Asia

87

31%

Other

14

5%Brazil

68

26%

USA

5

2%

Pakistan

99

37%

Other

Asia

77

29%

Other

16

6% Brazil

91

30%

USA

69

23%

Pakistan

56

18%

Other

Asia

52

17%

Other

36

12%

India huge market potential

-

1

2

3

4

2013 2014 2015

Production Non-fuel Fuel

India: Ethanol Market Balancebln L

2013 2014 2015

Production 3,042 3,058 2,927

Consumption 2,843 3,091 3,260

Fuel 195 422 597

Non-fuel 2,648 2,669 2,663

Trade

Import 34 101 515

Export 233 152 171

0%

1%

2%

3%

0

100

200

300

400

500

600

700

06 07 08 09 10 11 12 13 14E 15

India: Fuel Ethanol Consumption

Biofuel Consumption Implied Blending Rate

mln litres

Visit Green Pool at www.greenpoolcommodities.com @greenpoolcomms

© Copyright and IP reserved

Green Pool Commodity Specialists, Brisbane, Australia

Thank You!