Ethanol Market Trends Remain Weak and Stalemate

September 19, News

According to the commodity market analysis system, from September 12 to 19, the price of ethanol in China rose to 5,576 CNY/ton, with a price increase of 0.33% during the period, a month-on-month decrease of 1.19%, and a year-on-year decrease of 5.20%. With declining costs and increased bargaining space for downstream buyers, and high operating loads at ethanol production facilities, the overall impact has led to continued weakness in the ethanol market prices in China.

Cost Perspective: From the cost side, corn and dried cassava prices continue to decline. Fresh corn crops are gradually entering the market, putting downward pressure on prices, while dried cassava prices remain volatile but with limited room for further declines. Meanwhile, ethanol costs are being weighed down by bearish factors.

Supply side, production is ongoing at Hongzhan Huanan in Northeast China, with two lines in operation at Hongzhan Jixian, full production at Lahaha, and production at Bayan facility, Wanli facility, and Shenglong facility. The regular, grade, and anhydrous lines are shut down. Fukan facility in Jilin is operating three and four lines for shipment, Yushu facility is in normal production, and Xintianlong facility is also in normal production. Baiyecheng in Inner Mongolia is in production, and Jietainuo in Inner Mongolia is operating normally. Three factories in Mengzhou, Henan, are in normal production. The Huating facility in Jiangsu is operating at 50% capacity. The Qufeng facility in Shandong is in production. Some facilities in Anhui are experiencing instability and are expected to resume operations in the short term. The impact on ethanol supply is mixed.

On the demand side, terminal demand has improved, with an increase in the operating load of solvents and downstream demand. The production at Chinese liquor factories may increase, leading to higher ethanol consumption. The demand for edible ethanol before the holiday is also on the rise. These factors are positively influencing the ethanol demand.

Market Outlook: Costs remain weak, while plant load remains high. Downstream demand from the baijiu and chemical sectors is improving, and consumer demand is also showing a positive trend. Ethanol analysts expect the ethanol market to primarily consolidate in a wait-and-see manner over the short term.