New Energy Corp. idled an ethanol plant in South Bend, Indiana, because making the fuel has become unprofitable.
The company is mothballing the 100 million-gallon-a-year operation as a supply glut, tepid demand and high corn prices in the aftermath of the worst U.S. drought since the 1950s cut profitability, Russ Abarr, president of South Bend-based New Energy, said in a telephone interview today.
“That’s all working against the margins,” Abarr said. “Unfortunately, it’s happening at a lot of places in the country and we’ll see more of it happen.”
New Energy’s decision to idle the plant until it’s profitable comes after Valero Energy Corp., the third-biggest U.S. ethanol producer, said Oct. 30 that it shut distilleries in Albion, Nebraska, and Linden, Indiana.
Denatured ethanol for December delivery fell 2.2 cents, or 0.9 percent, to $2.332 a gallon yesterday on the Chicago Board of Trade. Prices have gained 4.9 percent this year.
Bunge-Ergon Vicksburg LLC plans to halt operations at its Mississippi mill by Nov. 30 and Biofuel Energy Corp. said in September that it closed a plant in Fairmont, Minnesota. Southwest Georgia Ethanol LLC stopped production at a Camilla, Georgia, operation last month.
Abarr said New Energy plans to sell the 28-year-old plant when the market improves.
Poet LLC, in Sioux Falls, South Dakota, is the largest U.S. ethanol producer, followed by Archer Daniels Midland Co. in Decatur, Illinois.