Ethanol Market Remains at High Levels with Consolidation

February 6 news

According to the commodity market analysis system, from February 2 to 6, the price of ethanol in China rose to 54,113 CNY/ton, with a 0.19% increase during the period, a 0.32% decrease month-over-month, and a 5.37% increase year-over-year. The ethanol market in China showed a slight upward trend, with some regional differences. Driven by the rise in raw material prices, ethanol manufacturers in China raised their quotes.

Cost Perspective: From the cost perspective, in the bio-fermentation ethanol sector, the high and stable prices of corn—the primary raw material—provide strong cost support. Meanwhile, downstream chemical companies and intermediaries have significantly increased their pre-holiday inventory demand, jointly driving up prices. Thus, the cost side of ethanol is experiencing favorable factors.

Supply side: From the supply perspective, major factories in the northeastern region of China have generally reduced production. For example, Heilongjiang Hongzhan has significantly decreased its production load, and the overall operating rate of the four factories has dropped to about 40%. The supply side of ethanol is influenced by positive factors.

On the demand side, demand remains robust, with downstream companies and intermediaries actively stocking up ahead of the holiday period. In the chemical industry, rigid demand for procurement remains stable. Driven by the sentiment of "buying when prices rise rather than fall," market transaction activity is strong. Factories are rushing to pick up goods at an accelerated pace, further reinforcing bullish market expectations and providing upward price support. The demand side for ethanol is also influenced by relatively favorable factors.

Market Outlook: Cost-side support remains strong, and factories continue to operate at low capacity. Coupled with the post-holiday restocking demand from downstream users, ethanol analysts expect the ethanol market to remain in a period of consolidation and wait-and-see mode in the short term.