China's fuel ethanol market: still has full potential

Affected by the epidemic situation and the decline in international oil prices, people in the industry hold a wait-and-see attitude towards China's 2020 full coverage of ethanol gasoline. At present, the biggest problem in the promotion of ethanol gasoline is the tight supply of raw materials. Prior to this, the inventory of aged grains was sufficient, but the digestion rate exceeded expectations last year, the inventory continued to decline, and there was considerable uncertainty in the supply of fuel ethanol. ASIACHEM believes that the current supply of raw materials makes the goal of nationwide promotion of ethanol gasoline uncertain.

 The good news is that the current increase in the production of disinfectant alcohol by Chinese fuel ethanol producers can increase profitability. Recently, COFCO Technology released the first quarter of 2020 report. Due to the epidemic situation, the product structure needs to be adjusted. In the first quarter of 2020, the medical and disinfection alcohol production capacity was expanded. On the one hand, the company reduced production costs through the diversification of raw materials. On the other hand, due to the needs of the epidemic situation, the company adjusted the product structure and production capacity in a timely manner, and expanded the production capacity of medical and disinfecting alcohol.

 EIA expects that the epidemic's greatest impact on the ethanol industry will occur in the second quarter of 2020 and then gradually dissipate over the next 18 months. It means that the official view of the United States is that by the end of 2021, the United States will fully recover from the impact of the epidemic, and the fuel ethanol industry will also return to a normal development track. It also means that international oil prices are likely to gradually return to normal levels before 2020 in 2022.

 The study of Asia Chemical Consulting's "China Fuel Ethanol Annual Report 2020" shows that from January to April 2020, more than 3 million tons of biofuel ethanol projects are underway, with a total investment of more than 15 billion yuan. The apparent annual consumption of gasoline in China exceeds 120 million tons. According to the current E10 ethanol gasoline (10%) promoted by China, the demand for fuel ethanol is huge.

 Recently, domestic ethanol projects have been actively promoted. On May 7, 2020, the civil engineering foundation of Ningxia's first fuel ethanol production line project using industrial exhaust carbon monoxide as raw material was completed, and it has entered the main construction stage of the project. It is expected to be completed and put into production by the end of the year. The fuel ethanol production line adopts the unique gas fermentation technology of Beijing Shougang Langze New Energy Technology Co., Ltd., and recovers the tail gas of the ferroalloy ore furnace, and absorbs carbon monoxide in the tail gas through biological fermentation to directly convert it into fuel ethanol. The total investment of the project is 410 million yuan, and annual fuel ethanol will be 45,000 tons after completion. By-product animal protein feed is 5000 tons, and the industrial output value is 300 million yuan.

 With the breakthrough of bioethanol technology in universities, the advancement of the diversification of ethanol raw materials and the breakthrough of relevant policy barriers, China's ethanol projects (including biomass and non-biomass) can not only further improve China's energy consumption structure, but also alleviate the shortage of petroleum resources. Reduce the external dependence of energy, improve the atmospheric environment, and provide protection for the needs of public health disinfection.