NEW YORK (REUTERS) - Three ships carrying ethanol were heading to China from the US Gulf Coast, three trade sources told Reuters on Monday (March 8), a sign that ethanol exports from the United States to the country are increasing drastically.

The shipments may surpass the total amount of US ethanol that China imported last year, a positive development for the US ethanol industry, which has seen decreased demand because of the coronavirus pandemic and the US-China trade war.

The ships each have a capacity of around 30,000 tonnes, or about 240,000 barrels of ethanol, the sources said, though the exact amount of the renewable fuel onboard was not immediately clear.

It was also unclear when the cargoes will arrive in China.

One source said at least two of the tankers left at the end of February.

In January, Archer Daniels Midland Co Chief Financial Officer Ray Young said that China has bought "roughly 200 million gallons" (4.76 million barrels) of US ethanol for the first half of 2021.

While China imported an annual record of 4.72 million barrels of US ethanol in 2016, it has not recently been a large importer. However, tightening supplies of domestic corn used to make the biofuel, coupled with comparatively cheaper US prices have spurred the need for imports.

If all three tankers were filled to capacity, the cargoes would be equivalent to around 720,000 barrels of ethanol, more than the 506,000 barrels of US ethanol shipped to China in whole of 2020.

The increased exports come as the US ethanol industry tries to return to more normal levels of production following the demand destruction from the pandemic. Ethanol production has increased to 849,000 barrels per day in the week to Feb 26, from a record low of 537,000 bpd last April, EIA data showed.

The United States and China signed a trade deal in January 2020, where China pledged to purchase more of American farm, energy and manufactured goods.