Group10_Valero - Factiva http/global.factiva.com/hp/printsavews.aspx?ppstype=Article Ethanol Producers May Turn Bonanza Into Bust Again By Mara

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Ethanol Producers May Turn Bonanza Into Bust, Again By Mara Lemos Stein Of DOW JONES CLEAN TECHNOLOGY INSIGHT 1184 words 16 December 2009 11:50 Dow Jones News Service DJ English With ethanol cash margins staging a recovery this year, it was only a matter of time before producers were encouraged to restart idled facilities and expand output to join the bonanza. The latest addition to the supply flow-- Valero Energy Corp. (VLO), which announced Monday it will bring three facilities back online--adds to analysts' concerns that, if too many people come to the party, some of them will find the punch bowl emptying out fast. "There are significant volumes of both idled and under-construction assets, and if operators are emboldened by the recent ethanol margins, we could see less-than-optimal assets begin to be reintroduced to production," said Ian Horowitz, an analyst at New York-based securities brokerage firm Rafferty Capital Markets LLC, in a report Tuesday. "Bottom Line: we are concerned that we could possibly see oversupply of ethanol in the second half of 2010." Steady ethanol prices and relatively low corn and natural gas prices are putting producers in the black for the first time since mid-2008. The fact that various producers in financial distress suspended production since then has supported ethanol prices even as demand for gasoline, in which ethanol is blended at a 10% rate in the U.S., dropped during the economic slowdown. However, some analysts are wary of a repeat of the excess supplies that contributed to dragging the profit margins down in 2008. In recent weeks, producers announced the intention to re-start plants with about 400 million gallons in production capacity . Corn ethanol installed capacity is approximately 13.1 billion gallons per year, with about 1.2 billion gallons of
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/11/2012 for the course EIN 4354 taught by Professor Tufecki during the Fall '08 term at University of Florida.

Page1 / 2

Group10_Valero - Factiva http/global.factiva.com/hp/printsavews.aspx?ppstype=Article Ethanol Producers May Turn Bonanza Into Bust Again By Mara

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online