JB Ethanol in maintenance mode
Published:Wednesday | March 26, 2014 | 12:00 AM
JB Ethanol Limited, which processes and sells fuel-grade ethanol, has seen production fall to lower levels year over year as overseas contractors say no to price increases attached to Brazilian-sourced raw materials.
Citing depressed conditions in 2013, Ian Parsard, senior vice-president, operations and finance, of the Jamaica Broilers Group, said turnaround in the coming months will depend on a number of factors. These included but are not limited to, the price of sugar; the price of hydrous alcohol, the Brazilian real to United States dollar exchange rate, the price of oil and gasolene, the price of corn and the price of anhydrous alcohol in the USA.
Revenue for the subsidiary, year over year, fell by 64 per cent. For the nine months ended January 25, 2014, external sales were J$496 million, down from J$1.37 billion realised for the nine months ending January 26, 2013.
The company posted a loss for the nine month period of $37 million, compared to a profit of $73.85 million for the comparable period last year.
With contracts still in place for the remainder of the financial year, revenues for the last quarter primarily reflect non-tolling fees, the company said in its recent financial statements.
Parsard, declining to state actual production levels, said 2013 was marked by very low production volumes as customers with whom the company has tolling contracts, that is, an agreement to process ethanol of their behalf, chose not to toll.
They opted out, he stated, "as the price of raw material in Brazil was high, compared to the price of anhydrous ethanol in the USA."
Until conditions change, the ethanol plant, which is now being held in maintenance mode, will continue to see low levels of output. The plant, Parsard said, continues to be maintained and is ready to operate at short notice. Parsard said should conditions turn around, any increase in demand would come from primary markets in the USA, with the EU as a secondary market.
Earlier this year, the Renewable Fuels Association, which represents the United States Ethanol industry, said, up to November 2013, US ethanol exports surged to 82.4 million gallons, with large volumes finding their way into new or emerging markets. Canada was the leading importer of US products, receiving 28.5 million gallons.