Corn-Based Ethanol Price Likely to Climb
In November, the price of corn-based ethanol price increased limitedly, while improving the market sentiment to some extent. Currently, the corn-based ethanol industry sees profit losses, and producers show increasing willingness to set their prices based on costs. It’s estimated that some low-end prices may trend up.
In 2022, the prices of edible and industrial ethanol were mainly affected by the fundamentals and costs. From May to August, the ethanol price was dragged down by the weak fundamentals, while it was pushed up from October by the rising costs.
The corn-based ethanol price started to rise from mid-November. With the rising corn prices, most ethanol producers started to see profit losses from November, so after producers in Northeast China raised their prices, those in other areas followed the uptrend amid cost pressure.
In November, affected by the logistics and unwillingness to sell at lows, the corn supply increment was under expectation. Therefore, the corn price in Heilongjiang showed an uptrend. Meanwhile, the corn prices in Shandong and Henan had hit the yearly highs. The purchasing prices of corn in Jilin were RMB 2,700-2,720/mt, up 3.63% from end-October, which was at the highest level in 2022. Those in Henan were RMB 2,970-2,980/mt, up 2% from end-October. Although corn-based ethanol producers raised their purchasing prices of corn, the replenishments were affected by the slow logistics and unwillingness to sell at low prices.
It's heard that some ethanol producers in Northeast China had closed most contracts with orders at hand. In H1 November, some producers in Heilongjiang shut their units down, waiting for the feedstock. Despite the rising transportation fees, the low inventory improved the bullish sentiment of ethanol producers. The main reason for the price rise at ethanol producers was to cope with the profit losses. Although the ethanol price showed an uptrend, purchasing prices at downstream chemical producers were hardly to rise, and the downstream operating rate was not high.
In the medium to long term, the ethanol price may increase limitedly curbed by the demand. In the short term, some producers will likely maintain their offers stable supported by costs, and fewer low prices will be seen.
Please click "Read more" for the full article.
