China Announces Ethanol Mandate Rollback

China this week announced a suspension of its ethanol mandate, signally a further reduction of imports from the United States. The E10 target was suspended because China says, “any promotion of ethanol-gasoline must be based on the precondition that food security is guaranteed.” The mandate was implemented in 2017 to draw down massive corn stocks in China. The U.S. exported about 20 percent of its ethanol supplies to China in 2016, worth about $300 million. However, shipments have since sharply declined. Renewable Fuels Association Geoff Cooper told Reuters, “This is definitely a step in the wrong direction, but it was not completely unexpected.” Beijing announced a 30 percent import tariff in 2017, and added additional tariffs through the U.S.-China trade war of another 40 percent.  China was expected to sharply increase imports of U.S. ethanol under the recently announced phase one trade deal, but is now unlikely to require large ethanol supplies without the mandate.