Narrow Range Consolidation in the Ethanol Market

January 9th, News

According to the commodity market analysis system, from January 4 to 9, the price of ethanol in China rose to 5,430 CNY/ton, an increase of 1.35% month-over-month and 4.43% year-over-year. The supply and demand for ethanol in China have both increased, with the cost of fermentation ethanol remaining high, limiting the upward trend. Terminal demand has improved, and the short-term cost benefits still exist. With the main production areas clearing inventory, the market is expected to stabilize with a slight downward trend.

Cost Perspective: From the cost perspective, the overall price center of gravity for corn continues to move upward. Price hikes at northern ports have spurred an increase in incoming shipments, and futures prices have also risen. Production areas have followed suit, with price increases ranging from 10 to 30 CNY per ton, mirroring the movements at northern ports and in futures markets. At grain collection points, shipment volumes remain limited, and at the grassroots level, farmers’ willingness to sell grain remains generally moderate. On the ethanol cost side, favorable factors continue to exert a positive influence.

Supply side, Heilongjiang Hongzhan's edible load has decreased, Zhongke Greene is in production, Shenglong's facility is operating normally, Wanli's fuel ethanol production has been reduced, Jilin Dongfeng is in production, Fukang's third and fourth lines are in production while the second line is shut down, Yushu's facility is in production, Xintianlong's facility has reduced production, Inner Mongolia Baiyecheng's facility is in production, Henan Houyuan is in production, Hanyong's facility is in production, Huaxing's facility is operating normally, Sichuan Hongzhan, Shandong Qufeng, and East China Huating are in production; Longhe and Guannan Xin Guan have shut down; Luomait, Anhui Wanshen, and COFCO Fuel are in production. The supply side of ethanol is affected by negative factors.

On the demand side, downstream ethyl acetate production has resumed following a reduction in output at the Yankuang Lunan plant, and the plant load in Henan has increased. Meanwhile, the Guangxi Jinyuan plant has halted operations, leading to a slight rise in the capacity utilization rate of ethyl acetate. The demand for ethanol is being supported by relatively positive factors.

Market Forecast: Overall, ethanol analysts predict that the short-term ethanol market in China will mainly experience narrow fluctuations.