Weak and Volatile Ethanol Market in China

April 24th News

According to the commodity market analysis system, as of April 24, the price of ethanol in China fell to 5,930 CNY/ton, with a decrease of 0.27% within the period, a month-on-month decrease of 0.67%, and a year-on-year increase of 12.52%. The price of ethanol in China has been on a weak downward trend, with factories showing a strong willingness to ship and actively competing for orders. Due to the rise in transportation costs, some factories have given concessions to the logistics sector. Downstream chemical enterprises are only maintaining rigid demand procurement, leading to a decline in the delivered price.

Cost Perspective: From the cost perspective, raw material corn prices initially weakened and then strengthened. As temperatures rise, farmers and traders at the grassroots level have become more eager to sell their grain, leading to an increase in market supply. This has created favorable factors for ethanol costs.

Supply side, from the supply perspective, the main factories in Hebei and Henan provinces are operating normally; the cassava ethanol plants in the East China region are not running at high capacity. For coal-to-ethanol production, the plant load at Yushen is low, and the facilities in Hunan and Hubei provinces are continuously shut down, while production in other regions is normal. The ethanol supply situation is influenced by positive factors.

On the demand side: Regarding the operating status of downstream chemical ethyl acetate plants: Henan Ruibai and Jingmen Qianxin’s ethyl acetate units have been shut down, resulting in an overall ethyl acetate operating rate of 51.57%. Recently, there has been some restocking activity, as other downstream chemical sectors are making necessary restock purchases. Downstream baijiu (Chinese liquor) demand remains rigid, but we’re about to enter the off-season. The impact on ethanol demand is mixed—both positive and negative.

The average difference (10-day moving average - 20-day moving average) is a core indicator for judging trends. From the trend, around April 24th, the 10-day moving average crossed below the 20-day moving average, indicating that ethanol prices in China have entered a downward channel.

SpotCommodity cycle position indicator shows: The current ethanol price in China is still at a 1-year high, with a significant potential for decline.

Market Outlook: As corn inventories gradually decline, there is potential for corn prices to rise in the later period, providing support for ethanol costs. Ethanol analysts expect the ethanol market to remain largely stable for now.