China has suspended its plan to implement a nationwide gasoline blend containing 10% ethanol this year, said Reuters sources, following a sharp decline in the country’s corn stocks and limited production capacity of the biofuel, reported Reuters.
The reversal is a heavy blow to domestic producers that have built new plants, as well as biofuel exporters, including the United States and Brazil, which were looking to benefit from growing Chinese demand. China was expected to increase imports of US ethanol after the recent announcement of Phase 1 of a trade agreement.
Beijing’s mandate – known as the E10 target – was conceived as a way to digest the country’s huge state corn reserves and reduce pollution in the world’s largest car market by using the cleaner-burning fuel. China is now unlikely to require large ethanol supplies without the mandate.
“The decision was made after further study, which suggests any promotion of ethanol gasoline must be based on the precondition that food security is guaranteed,” said a Reuters source, in reference to declining grain reserves in China.