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U.S. Ethanol Capacity Levels Off, Biodiesel Construction Cools: Newest Research Available From HighQuest’s Biofuels Index (2.20.2008)


U.S. Ethanol Capacity Levels Off, Biodiesel Construction Cools: Newest Research Available From HighQuest’s Biofuels Index
Press Release – Topsfield, MA -- Feb. 20, 2008 – HighQuest has released summary findings from its latest Biofuels Index, a quarterly database that tracks planned and actual build-out of biofuels production capacity.  Data collected in Q4 2007 indicates that, while online ethanol capacity increased over the quarter, the industry also experienced declines in both capacity under construction and capacity in planning. This supports information reported in earlier issues of the Biofuels Index that suggested a leveling off of corn-based ethanol build-out. 


 • Total ethanol online capacity increased approximately 407 MGY, representing growth of nearly 6%;

 • Ethanol capacity under construction decreased by 344 MGY, a decline of 5.4%; and

 • Ethanol capacity in planning contracted by 577 MGY, or 3.5%.

"We are circumspect about the numbers for total planned capacity, as it is very easy to announce plans.  Additionally, some groups that have suspended or cancelled their plans have not made those decisions public.  As a result, we believe that there is ‘phantom capacity’ reflected in these numbers," said Jacob Golbitz, director of research for Soyatech and its parent company, HighQuest Partners.  "To get a better handle on this situation, in Q4 2007 we began tracking planned facilities that had exhibited no signs of life over the past four quarters, and began labeling that cumulative planned capacity as ‘unconfirmed’," he added.


 • Total online biodiesel capacity increased approximately 202 MGY, representing 11% in growth;

 • Biodiesel capacity under construction contracted over the period by 239 MGY, or 17.5%; and

 • Biodiesel capacity in planning (contrary to ethanol) increased by 210 MGY, or 9.7%.

Approximately 173 MGY of biodiesel capacity in planning was explicitly cancelled in Q4, which was more than offset by the 306 MGY in new planned capacity announced during the quarter. 

"As with ethanol, we are looking at phantom capacity in biodiesel, and have determined that approximately 313 MGY falls in our ‘unconfirmed’ category," said Golbitz.

The Biofuels Index also reports that inadequate infrastructure for the distribution of ethanol, commonly referred to as the "blend wall", continues to keep ethanol prices below gasoline prices, which may benefit the industry over the long term by giving petroleum companies an economic incentive to blend with ethanol. This would result in lowering the blend wall as more infrastructure is developed to get ethanol to market. However, this positive development could be offset by high corn prices which place financial pressure on ethanol producers and give added support to consolidation now taking place in the industry.

Updated each quarter, Soyatech’s Biofuels Index includes detailed data on the biofuels industry, including:

 • tracking of production in all three phases of development: planned, under construction and operating, with data residing in a pivot table that can be manipulated by subscribers to determine current and future production, feedstock demand, etc., on a regional or more tightly focused geographic basis;

  • searchable plant-level lists of ethanol and biodiesel production facilities, including capacity and location (geographic coordinates built-in), and where possible, feedstocks, permitting status and projected ground-breaking and operational dates; and

  • analysis of financing sponsors for plants and projects: publicly-traded companies vs. privately funded facilities.

A subscription to the Soyatech Biofuels Index may be obtained by logging on to
www.soyatech.com or by calling 800-424-SOYA.

About HighQuest
HighQuest Partners is a management consulting and strategic advisory firm that helps executive teams around the world to make better informed decisions about their strategies, investments/m&a, and governance. Since 1992, HighQuest and its subsidiary SJH & Company have completed over 500 strategic assignments for strategic players and financial investors & their portfolio companies in the global grain, oilseed, food, agribusiness, biofuels, industrial, & financial services sectors.

About Soyatech LLC

Soyatech (
www.soyatech.com) assists companies in the food and agri-business sector assess and develop market opportunities through reports, conferences, publications and consulting services. Founded in 1985, the company publishes the annual Soya & Oilseed Bluebook, the industry’s leading source of information on companies and products, an industry-focused email newsletter (in daily and weekly editions), and Soyatech.com, the award-winning business-to-business online resource for the industry. Soyatech’s information services are referred to by thousands of the world’s leading commodity, food and biofuels companies in over 100 countries every business day. Soyatech LLC is headquartered in Bar Harbor, Maine, with offices in Boston and St. Louis.

Contact: Hadley Coonley email: hcoonley@highquestpartners.com

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