Houston — US and Asian ethanol markets on Wednesday were unaffected by the announcement that the Chinese government would hike the import tariff on undenatured US ethanol to 75% from 65%.
"The 65% duty [on undenatured ethanol] had already killed the trade flow between the US and China. The 10% hike will not make a big difference," an Asia-based trader said.
The higher tariff, announced Tuesday, was part of a larger retaliation against US tariffs in escalating trade tensions between the two countries.
The ethanol arbitrage from the US to China has been closed for the most of the year due to the climbing tariffs, and market participants don't expect any change imminently.
In the meantime, traders considered things business as usual and haven't paid much attention to incremental changes in the size of the tariff.
"When it doesn't work it doesn't work," one US source said. "The tariff could be +10% or +10,000,000%."
The US benchmark Argo market slid Wednesday, falling to around $1.2525/gal after S&P Global Platts assessed it at $1.2675/gal Tuesday.
The main Asian ethanol reference price, CIF Philippines, fell $2/cu m to $425.67/cu m on Wednesday.
