Ethanol Market Prices Remain Weak and Consolidate

May 9th News

According to the commodity market analysis system, after the holiday period, China’s ethanol price fell to 5,815 CNY per ton, marking a 0.32% decrease over the period, a 1.53% drop compared to the previous month, and a 9.84% increase year-on-year. Overall, the Chinese ethanol market has shown a relatively weak trend, with multiple negative factors overlapping and driving prices steadily downward. On the one hand, demand from the baijiu industry has weakened, leading to reduced procurement volumes of ethanol. On the other hand, corn—the core raw material for ethanol production—has seen its price decline, further reducing cost support for ethanol production. As a result, small-scale producers have been the first to lower their quoted prices, triggering a general downward trend in ethanol prices.

Cost Perspective: From the cost perspective, during the May Day holiday, corn prices in Northeast China remained largely stable, with overall market trading activity remaining subdued and no significant price adjustments observed. However, following the holiday, rumors of an extended auction of old rice put downward pressure on market sentiment, causing futures prices to weaken and prompting a slight decline in procurement prices at northern ports compared to pre-holiday levels. Ethanol costs are also being weighed down by negative factors.

Supply side, from the supply perspective, due to high prices, the market is experiencing sluggish sales, and factory inventory volumes are continuously rising. Enterprises are lowering their quotes to clear inventory. The ethanol supply side is influenced by bearish factors.

Demand Side: On the downstream side, the downstream market will maintain a rigid pace of demand-driven procurement. Specifically, ethyl acetate plants may schedule maintenance in May, and coupled with a decline in export volumes, this will weaken their demand for ethanol. Meanwhile, demand from the baijiu industry is trending downward as temperatures rise, leading to a reduction in ethanol consumption. Overall, the demand side for ethanol is being weighed down by negative factors.

Market Forecast: The main bio-fermentation ethanol plants in Northeast China are scheduled to undergo maintenance, which will directly lead to a decline in regional supply. Meanwhile, corn—the core production raw material—is expected to see a slight price increase. Coupled with the continued low-load operation of ethanol plants, these multiple factors will collectively help stabilize prices. Ethanol analysts anticipate that the ethanol market will remain largely in a consolidation phase.