OREANDA-NEWS. Robust global ethanol demand and a busy US export schedule have helped US ethanol prices maintain hefty premiums to spot gasoline for more than two months, the longest period since Argus began tracking ethanol in 2011.

US ethanol prices have been in steady decline since 30 October, shedding between 9-10pc in value in just over two weeks' time, but spot gasoline plummeted more quickly, by as much as 37pc over this same period. Premiums for ethanol to regional spot gasoline averaged 30?/USG over the past week, with the largest gap seen in the Chicago market, where spot gasoline is trading under a $1/USG. Argo ethanol now trades at premiums of more than 51?/USG to concurrent Chicago RBOB.

While a global supply glut of crude oil depresses refined products prices, sustained healthy demand from Asia and a tight European market have underpinned the US ethanol marketplace. Approximately 628,000 bl, or roughly four cargos, have been booked out of the Gulf coast this month for delivery to China, Korea and the Philippines. An additional 250,000 bl was heard loading on the US Atlantic coast for delivery to China, while a 76,000 bl cargo left Houston in late October for the east coast of Norway along with a second shipment to the Netherlands to supply a particularly tight European marketplace.

Peru was also heard buying an unknown volume of US ethanol for the month of November with at least one ship making the journey and Jamaica slated to take as much as 70,000 bl this month. Market participants expect as much as 500,000 bl of US ethanol to reach China between now and the end of the year.

The Brazilian ethanol market has also been tightening recently with wet weather delaying crushing activity. The recent 6pc increase in gasoline prices has also driven consumers to hydrous ethanol en masse.

Yet despite stout global demand, the US ethanol market is still facing pressure from rising production and inventories. US producers are increasingly attempting to export their way out of an oncoming supply glut as some expect production to reach as high as 990,000 b/d this winter and inventories have grown by nearly 980,000 bl, or 5pc, in just four weeks.

Booking out imports has proved to be the release valve for preventing a further buildup of supplies in the US. While strong LCFS supplies have drawn at least two cargos of Brazilian sugarcane ethanol to California this month, market participants believe that only 940,000-1.2mn bl of the 1.9mn bl booked for November will actually hit US shores as Brazilian prices have risen markedly since late September.

RINs traders have taken note of possible bookouts, with prices for D4 credits rallying more than 7?/RIN, or 12pc, this week alone. Although Brazilian sugarcane ethanol generates a D5 credit, obligated parties typically use D4 RINs to comply with their overall advanced biofuel obligation. RINs prices have been trending steadily upward since 19 September ahead of the EPA's 30 November announcement for renewable fuel requirements. Yet rising export activity and a lack of Brazilian imports means RINs supply may be tighter than originally anticipated heading into the announcement.