Ethanol blending in Mexico could prove to be a boon for that country's producers, the Mexico office director of the US Grains Council said recently.
"There is currently production of 66 million gal/year in Mexico," Ryan LeGrand, said in an interview with S&P Global Platts. "If E6, really 5.8%, is allowed and everybody across the country blends that level, it would be 790 million gallons of ethanol."
The Mexican government is currently eying proposed legislation about its fuel quality. The legislation could allow up to 5.8% ethanol to be blended with gasoline.
Mexico currently uses MTBE as its primary oxygenate in fuel. The current legislative proposal would allow for up to 15% MTBE blending by volume.
Most Mexican ethanol plants have a capacity of around 13 million gal/year, LeGrand said.
Plants in the US, on the other hand, commonly produce more than 100 million gal/year. Some, like Archer Daniels Midland's Cedar Rapids, Iowa, plant, are churning out 300 million gal/year.
With such a large gap between production capacity and possible demand, there's plenty of space for the Mexican biofuels industry to expand.
Producers currently use sugarcane as their primary feedstock but are looking at expanding the use of sorghum, also known as milo.
While Mexico invests in its production infrastructure, the country could bring in imports from the US.
Several US producers have commented in recent earnings calls about the possibility of Mexico entering the market as a buyer for US product.
"The opportunity is huge," said Steve Bleyl, Green Plains' vice president of ethanol marketing. "Right now, industrial grade export volumes are going down there, not fuel grade."
But, similar to a lack of production capability, there is also a shortage of import infrastructure.
LeGrand said there are rail lines and liquids ports to bring in product over land or sea, but "the tank infrastructure is not in place."
There would need to be investment in tank infrastructure to handle ethanol imports.
But LeGrand said the goal of allowing ethanol blending would be for domestic job creation and industry, not imports.
"The Mexican government is promoting biofuels to promote their own industry," he said.
