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US ethanol industry nearing breaking point, says CEO

July 30, 2019 00:00:00

NEW YORK, July 29 (Reuters): The US ethanol industry is about to break under the weight of the Trump Administration's trade war with China and the surge in the number of small refineries exempted from the nation's biofuel laws, said Todd Becker, CEO of Green Plains.

The US ethanol industry was preparing for growth in recent years, but the momentum has stalled in the face of President Donald Trump's trade war with China, a major buyer, and his administration's decision to align itself with the oil industry on demand-cutting waivers from biofuel laws, Becker said.

The sustained downturn in margins will finally begin taking its toll as some producers run out of money and begin a host of austerity measures to weather the storm.

"Some plants will slow down, some will shut down, some will shut down forever," Becker said late last week in an interview with Reuters.

Trump fulfilled his promise to lift the summer ban on sales of higher ethanol blends of gasoline, but the infrastructure needed to deliver it requires time to be built. There are some 1,000 retail stores equipped to supply so called E85 gasoline, but the industry needs 10,000 stores to boost demand, Becker said.

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