H1, 2022 Fuel Ethanol Price Stayed at Highs on Multiple Factors
In H1, 2022, China’s fuel ethanol price hit record highs. China’s import volume of fuel ethanol declined, giving opportunities for Chinese-made fuel ethanol. However, prices of energy products fluctuated widely, and the food prices stayed at highs, so the demand for fuel ethanol increased first and then declined. In Q2, the limited transportation dampened the demand for ethanol gasoline.
In H1, 2022, China’s fuel ethanol price increased first and then declined, and the average in H1 was higher than that of 2021. The international crude oil prices rose to highs in March, pushing up the prices of MTBE and gasoline. The ethanol gasoline enjoyed cost advantage in H1 compared with other kinds of gasoline, so the demand improved. Supported by the improved profits and demand as well as declined imports, China’s ethanol producers showed increasing enthusiasm in fuel ethanol production from March to May.
In H1, 2022, China’s fuel ethanol price increased first and then declined, reaching record highs. According to SCI, the fuel ethanol price in Northeast China averaged at RMB 7,075/mt, up RMB 650/mt or 9.96% from H2 of 2021. The lowest price was RMB 6,525/mt in January. Later, with rising crude oil prices and high demand from state-owned refineries, the market price fluctuated upwards. The highest price in Northeast China reached RMB 7,550/mt in end-March. Ethanol producers raised their yield rate of fuel ethanol due to its better profits. However, China’s fuel ethanol price fluctuated downwards from March to June affected by the declined profits and demand.
In H2, 2022, it’s estimated that the fuel ethanol output will stay largely stable from H1. The capacity is expected to rise by 600kt/a to 6,245kt/a. Bullish factors from the policy side will gradually be seen in H2, and the demand is expected to improve. Meanwhile, with less unit maintenance in H2 and improved demand for refined oil, it’s estimated that the operating rate at state-owned refineries will increase notably, so the demand for fuel ethanol will be stable-to-rising.
In H2, the fuel ethanol price will see more uncertainties. On the one hand, the international crude oil prices may fall from highs. On the other hand, the cost may change with new arrivals of grains. In H2, it’s estimated that the monthly average price of fuel ethanol in Northeast China market will fluctuate within the range of RMB 7,000-7,250/mt.
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