Post Covid-19 Trends for Thailand’s Ethanol Industry

The crisis of Covid-19 pandemic which has started from the beginning of the year to the present. For the past six months, 13 million people worldwide have been infected while over 500,000 lost their life. As a result, almost all countries formulated and implemented measures concerning city lockdown and country shutdown, directly reducing amount of petrol and energy’s prices. A most talked about history, which can be considered the first of the world, is contract purchasing in advance of the West Texas Intermediate (WTI)’s crude oil, in which sellers had to lose their profits. The situation is called, “The minus price of crude oil”. Since the amount of petrol used dropped so drastically that sellers could neither sell all the product nor have any storage space, they had to sell it under surprisingly cheap prices and buyers needed to find a place to store the product themselves.

Author by Saksan Phromnit (Ph. D.).

Thailand’s ethanol industry is also suffering from such economic downfall due to a curfew, urban and provincial shutdown as well as social distancing which resulted in decreasing use of petrol in the country. During the period when the pandemic was at its peak, the amount of ethanol use decreased from 4.33, 4.30, 3.97 and 2.92 million liters daily in January, February, March and April respectively (Source: Dept. of Energy Business). Fortunately, the Thai government responded to the situation quite fast by permitting ethanol manufacturers in Thailand to change formula of ethanol used as a fuel to the one used as a disinfectant so that it can be donated and sold even temporarily. Such was a policy effectively helpful for the manufacturers and consumers in urgent need of a rare and pricey disinfectant product for the Covid-19.

However, when considered by various information, trends of Thailand’s ethanol industry after the Covid-19 pandemic seem positive and may not be affected as much as other countries’ thanks to successful administration of the Thai government. From a perspective of information, once announcement of lenient measures was in effect, social, professional and travel activities immediately resumed. Although the activities differed from before the period of wide infection, they are regarded as almost normal.

Ubon Bio Ethanol co. ltd

Immediately after the lenient measures were announced, ethanol-based fuel use increased from 2.92 million liters daily in April to 3.49 million liters daily on 17 May 2020 (Source: Dept, of Energy Business). In other words, it was approximately 79% of the average amount used per day before the pandemic. The existing situation may reflect confidence of the public and business sectors concerning the Thai government’s administrative capacity as well as other organizations’ abilities and efficiency in tackling the infection. Besides, medical treatment in Thailand is so effective that the death rate was very low, so people’s lifestyle and business resumed almost as normally as the day before the viral propagation. Although it did not affect low use of fuel as much as before the pandemic, amount of use did not increase as much as already speculated.

The real impact instead took place in April owing to an indefinite delay of Thailand’s fuel restructuring plan under the urgent need of 70% alcohol disinfectants to prevent the spread of Covid-19. Under the plan, the Ministry of Energy aimed to promote biofuel and boost income among farmers who grow energy-based plants by cancelling gasohol 91 production since 1 June 2020 to announce gasolhol E20 as oil-based benzene so that oil sellers had enough time to prepare for cancelling the sale at gas stations. The cancellation will be effective from 1 September 2020 onwards. By the time, use of ethanol will have reached 7 million liters daily from the current 4-5 million liters per day. In addition, thanks to effective control of Covid-19 in Thailand, implementation is expected to start as planned or at least some months later.

Overall, Thailand’s ethanol industry can keep growing due to confidence of the public and business sectors. Most activities are returning to normal, but some people keep travelling less than before and working from home instead of going to the office. In terms of the country’s fuel restructuring plan, it is believed to be implemented as before even if it may not be able to reach 7 million liters per day as expected in case of no other additional measures. Many foreign countries are cancelling country shutdown and beginning to rehabilitating themselves, but the Covid-19 resulted in fragile economy in Thailand and other parts of the world. That is why other countries are facing the second wave of infection. With the stronger Thai Baht value, stakeholders must watch closely the trends of ethanol production for the next two quarters of the year and find ways to solve problems that may occur later.