Ethanol Market Prices at High Levels with Consolidation

April 3 news

According to the commodity market analysis system, as of April 3rd, the price of ethanol in China rose to 5,905 CNY/ton, with a price increase of 0.57% during the period, a 7.47% increase from the previous month, and a 12.77% increase year-over-year. The rise in the price of fermentation ethanol in China is mainly driven by the following factors: first, the high price of raw material corn; second, the low facility utilization rate of manufacturers; and third, the pull of downstream demand.

Cost Perspective: From the cost side, the upward trend in corn futures during the first half of the month boosted spot market sentiment, prompting traders to slightly and incrementally replenish their inventories. Deep-processing enterprises continued to raise their procurement prices, providing solid support for demand. However, toward the end of the month, news of increased wheat auctions and rumored auctions of overdue rice created downward pressure, causing prices to weaken slightly. Meanwhile, ethanol costs remained supportive, acting as a positive factor.

Supply side: From the supply perspective, there is a possibility of resumption in production for ethanol plants that have reduced output or halted operations. Major plants may maintain low production levels due to cost pressure. Heilongjiang Hongzhan and Wanli facilities are operating at low capacity, while COFCO Jidong, COFCO Hailun, and Tieling facilities are stable. Henan Houyuan and Huaxing facilities are operating normally, and the Han Yong facility has resumed production after a short shutdown. The ethanol supply situation is influenced by positive factors.

On the demand side, downstream rigid demand procurement continues to keep prices at high levels. Overall, downstream demand for ethanol has increased. Taken together, ethanol plant inventories are expected to continue declining. The demand side is being influenced by relatively positive factors.

Market Forecast: Ethanol analysts expect the ethanol market to remain largely stable.