Ethanol Market Prices Slightly Decline

January 16 news

According to the commodity market analysis system, from January 12 to 16, the price of ethanol in China fell to 5,411 CNY/ton, with a decrease of 0.26% during the period, a month-on-month decrease of 0.14%, and a year-on-year increase of 3.91%. The ethanol market in China showed a slight decline, with some regional differences. The operating load of major factories may have been reduced, and there might be inventory pressure, which could lead to favorable logistics conditions, making it possible for prices to fall.

Cost Perspective: From the cost perspective, corn prices are on an upward trend, providing strong cost support for corn ethanol. Meanwhile, ethanol supply within the market is increasing, and continued positive demand is likely to keep ethanol prices trending upward. However, the overall upside potential is limited due to high costs, making it difficult for profits to improve. As a result, bioethanol continues to operate at a loss. The cost side of ethanol is thus influenced by favorable factors.

Supply side, the ethanol capacity utilization rate remained at 61.67%. In terms of edible ethanol production, Heilongjiang Hongzhan's load decreased, while Zhongke Green and Shenglong facilities operated normally. Wanli fuel ethanol reduced production, Jilin Dongfeng and Fukan's third and fourth lines were in operation, but the second line was shut down. Yushu's facility was in production, and Xintianlong reduced production. Baiyecheng in Inner Mongolia, Henan Houyuan, Hanyong, Huaxing, Sichuan Hongzhan, Shandong Qufeng, East China Huating, Longhe, and Guannan Xin Guan were shut down; Luomait, Anhui Wanshen, and COFCO Biochemical were in production. The supply side of ethanol was affected by negative factors.

On the demand side, demand for baijiu and chemicals has improved, with terminal demand picking up and overall demand volume trending upward. The demand for ethanol is being supported by relatively favorable factors.

Market Forecast: Affected by rising costs, ethanol plants may see a decline in operating rates. However, given current inventory levels, the prevailing bearish market sentiment, and limited downstream demand, ethanol analysts expect that the ethanol market is likely to continue declining in the short term.