Ethanol is an alcohol produced by fermentation, mostly from carbohydrates produced in sugar or starch crops such as corn, sugarcane, or sweet sorghum. It is widely used as a biofuel alternative fuel in the United States, most commonly used in gasoline blends including E10, E15, E85, where E represents the percentage of ethanol in the blend by volume. Ethanol has a higher octane rating than gasoline, which allows for higher compression ratios, better fuel efficiency and lower emissions.
The global U.S. Ethanol Market is estimated to be valued at US$ 32.07 Bn in 2023 and is expected to exhibit a CAGR of 8.4% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity
The key opportunity for the U.S. ethanol market lies in lowering gasoline import dependence through increased usage of domestic ethanol production. Currently, the U.S. imports around 10 million barrels of gasoline per month, primarily from countries like Canada, Saudi Arabia and Mexico among others. However, increased usage of biofuels like ethanol can help reduce this dependence by substituting a portion of gasoline demand with domestically produced ethanol. Ethanol blends up to E10 are already approved for use in regular cars, while E15 and E85 blends can further reduce net import volumes. By 2030, a higher shift towards mid-level ethanol blends can potentially displace over 800,000 barrels per day of imported gasoline, considerably boosting energy security. This presents a major market opportunity for ethanol producers to capitalize on through collaborative efforts with automakers and oil marketing companies.
Porter's Analysis
Threat of new entrants: The US ethanol market is moderately difficult to enter due to long-term contracts established between producers and suppliers. Bargaining power of buyers: Fuel blenders have significant bargaining power as they can switch between ethanol and other alternatives easily. Bargaining power of suppliers: Corn producers have moderate bargaining power as they supply the key raw material for ethanol production. Threat of new substitutes: Alternatives like renewable diesel and hydrous ethanol pose threats to substitution. Competitive rivalry: The US ethanol market is highly competitive due to presence of multiple regional and national producers.
SWOT Analysis
Strengths: Growing government support and regulations favoring ethanol use. High availability of corn as raw material. Weaknesses: Fluctuating corn prices affect production costs. Ethanol has less energy content than gasoline. Opportunities: Rising demand for cleaner fuel alternatives. Scope for export of surplus production. Threats: Competition from other biofuels and alternatives. Vulnerability to changes in government policies.
Key Takeaways
The Global U.S. Ethanol Market Growth is expected to witness high growth during the forecast period 2023 to 2030.The U.S ethanol market is projected to reach US$ 32.07 Billion by 2024.
The US ethanol market is expected to witness high growth owing to the stringent environmental regulations and the Renewable Fuel Standard program. The Midwestern region currently dominates the US ethanol production led by states like Iowa, Nebraska, Illinois and Minnesota. These states have ideal climate and soil conditions for massive corn cultivation.
Key players operating in the U.S. ethanol market are Boehringer Ingelheim, Zoetis, MSD Animal Health (Merck Animal Health), Elanco Animal Health, Ceva Santé Animale, Virbac, Bayer Animal Health, Vetoquinol, Huvepharma, IDT Biologika, Merial (now part of Boehringer Ingelheim), Heska Corporation, Dechra Pharmaceuticals, Phibro Animal Health, Neogen Corporation. These players are focusing on capacity expansion, mergers and acquisitions to strengthen their market position.
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