Strong Ethanol Market Performance in China

February 13 news

According to the commodity market analysis system, from February 6 to 13, the price of ethanol in China rose to 5,444 CNY per ton, with a price increase of 0.57% during the period, a month-on-month increase of 0.48%, and a year-on-year increase of 5.97%. The rise in the price of fermentation ethanol in China was mainly driven by the following factors: first, the supply from major factories decreased, leading to regional supply tightening; second, as the Spring Festival approached, downstream and intermediary inventory replenishment demand increased, accelerating the restocking pace; third, raw material costs remained high, providing strong support for prices; fourth, factories had a strong intention to raise prices, further consolidating the upward trend.

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 stockpiling demand, jointly driving up prices. Thus, the cost side of ethanol is experiencing favorable factors.

Supply side, From the supply perspective, there is a possibility of resumption of production or reduction in shutdowns at ethanol plants. Major factories may maintain low production levels due to cost pressure. The ethanol supply situation is influenced by positive factors.

On the demand side, downstream chemical industries are resuming production, which could lead to an increase in demand. Overall, downstream demand for ethanol is on the rise. Taken together, ethanol inventories at factories are expected to continue declining. The demand side of ethanol is being influenced by relatively positive factors.

Market Forecast: The increase in ethanol prices is greater than the increase in raw material prices, leading to a reduction in losses for ethanol production. Ethanol analysts predict that after the holiday, the ethanol market in China will mainly focus on consolidation.