Ethanol stock
History:
Ethanol, (popularly also known as Ethyl alcohol, grain alcohol, hydroxethane, EtOH), has its molecular formula represented as C2H6O. It is a colorless and a flammable chemical compound. Ethanol has been used since ancient times, in the making of alcoholic beverages. It is either used in the pure or the denatured form, as a solvent or in medicines, and colognes. It is also proposed as a clean-burning additive to gasoline. However, it is mainly used as an intoxicating agent in fermented and distilled liquors. Its utility origin can be traced back to the Neolithic period.
How is ethanol produced
Ethanol production, involves converting cropscorn, barley, biomass, sugar cane, wheat into simple sugars. Ethanol (renewable fuel) is derived from fermented sugar.
Ethanol Today
Today ethanol is widely used in fuel generation. USA being the largest producers of corn, therefore is also the largest producers of ethanol. To improve the fuels emission quality, ethanol is blended with gasoline. E85 is one such blended fuela blend of gasoline and ethanol. E85 contains 85% ethanol and 15% gasoline. E85 is widely used in Brazil and Sweden. Today it is becoming equally popular in the US as well. E85 also offers better fuel mileage.
Today many companies use ethanol as a by-product in the manufacture of fuel. The latest to top the Indian market news, is the entry of Reliance in the manufacture of ethanolsending shivers down the spines of leading sugar barons of Maharashtra. But then, what is the global scenario on Ethanol Stocks
In the year 2005, according to the information provided by Oil Price Information Service (OPIS), wholesale prices of ethanol plummeted almost 30% in the early quarter. This drop was attributed to an oversupply of ethanol; caused due to flat domestic consumption clubbed with an increase in the production of ethanol.
The year 2006, has noticed a significant rise in the price of ethanol, compared to the price range, 6 months back. Today, ethanol is the cheapest fuel around.
Market Trade Patterns
Corn-based ethanol contracts, trade on Chicago Board of Trade, while sugar-based ethanol trade on the New York Board of Trade. Because of the high price of gasoline, and the shortage in the supply of the fuel, ethanol manufacturers today, can look towards much higher returns. An ethanol plant could (and also would) be making many multiples more than what a refinery makes today. This has sent ripples across the market and more ethanol plants are expected to mushroom in the near future. More ethanol plants only promise more supply for the coming year. According to research statistics and survey, the existing number of ethanol plants, in the US is not sufficient to meet the ever-increasing demand. This has further boosted the significant growth of ethanol popularity.
Leading manufacturers of ethanol in the US areArcher Daniels Midland, Green Plain Renewable Energy, Xethanol Corp, The Andersons Inc, Greenshift Corpbesides giant manufacturers of Ethanol, such as, VeraSun, Hawkeye, Aventine Renewable Energy. One point needs to be noted, that some of these companies do not have ethanol production as their flagship business.
New technology and reduction in the oil imported to US, is expected to boost the use of ethanol in US. Statistics reveal, a 20% growth in ethanol production in the UScourtesy www.marketwatch.com. As per the recent data from the Department of Energy (US), maximum number of ethanol stations, are found in Minnesota in US, followed by Illinois.
Ethanol Fuel Benefits
Accordingly, even vehicle manufacturers, such as Ford, are now manufacturing vehicles that are gasoline and ethanol compatible. Besides, vehicles that run on ethanol also perform better in enhancing the emission quality. Vehicles using ethanol, release less pollutionless of hydrocarbon and benzene emissionsand also aid cleaner emission. Also its easy and quick availability has only increased more focus towards ethanol production. Ethanol production uses what otherwise proves to be a total wasterice hull, rice straw, sugarcane bagasse, corn fiber, solid waste, switch grass etc. While petroleum takes hundreds of years ready to be used, ethanol only takes approximately around 13 hours to be produced!
Ethanol Stock and Investments
The constant rise in oil costs, coupled with innovations that bring about easier fermentation methods, have reduced considerably reduced the cost of ethanol; and thereby increased its demand. Where Brazil leads, as the world leader in ethanol-based fuel, America has now begun its competition amongst the local players now.
Ethanol (the alcohol-based alternative fuel produced from starch or sugar-based feedstock), is particularly selling very hot this year. Increase in the demand for ethanol, is expected to send the sugar and corn prices soaring higher. Ethanol, on the other hand continues to attract hot money today. Except that there is a constant fear that daunts the players, is that ethanol demand may outpace its supply. Many investors in this alcohol product are raking in big money today and are remarkably paid off. The ethanol investment market shows a very optimistic future. Ethanol investments and stocks depict a roaring and soaring scenario today. With a strong endorsement in the State of the Union speech, President Bush has only acted as a catalyst in bringing about a significant rise in ethanols public profile. This has resulted in more and more ethanol producers going public as well. As a result, ethanol production and stocks continue to grow in the US. VeraSun Energy and Aventine Energy have also entered the market with their initial public offering.
Currently Archer Daniels Midland is the leading ethanol producer. Also coming under intense focus, is VeraSuns (the second largest ethanol producer) IPO, expecting to skyrocket VeraSuns position, as the biggest ethanol player available to investors.
Studies also reveal following ethanol players, who are expected to attract and lead the Ethanol Stocks: • VeraSun • Xethanol
Investors would be glad to note that the American Stock Exchange (ASE) has approved the listing of Xenathol.
Research also depict that investors would want to focus their research efforts and monitor the stock proceedings of the following producers as well:
• Archer Daniels Midlands • MGP Ingredients • Pacific Ethanol • BP • DuPont
However, there are other surveys that indicate a tumble down in the Ethanol Stocks. Declining oil prices continue to bear negative impact on ethanol stocks, but much cannot be predicted or estimated about oil prices. It is only a matter of time and popularity for the rest of the world to catch up with ethanol.
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