2023 Edible and Industrial Ethanol Capacity Grew
Preface: In 2023, China’s total capacity of edible and industrial ethanol achieved growth for the first time since 2021. Although the capacity of edible ethanol produced by fermentation technology declined, the capacity of industrial ethanol represented by methanol-based ethanol expanded. Under the influence of technological changes, the ethanol industry is beginning a new development.
China’s edible and industrial ethanol grew again in 2023, and newly added capacity exceeded the eliminated capacity.
According to SCI, the total capacity of edible and industrial ethanol in China reached 13,679kt/a, up 82kt/a or 0.6% Y-O-Y. In 2023, the newly added capacity was 658kt/a, and the eliminated capacity was 576kt/a, resulting in a net increase of 82kt/a. All the eliminated capacity was at the enterprises with the capacity of 60kt/a or less, mainly focusing on fermentation technology. There were only four sets of newly added units, among which the largest unit in Shaanxi had a capacity of 500kt/a, accounting for 75.99% of the total newly added capacity.
Edible ethanol industry saw accelerated integration, and the withdrawal of small capacity also sped up.
According to SCI, China’s edible ethanol capacity was 12,265kt/a in 2023, down 418kt/a or 3.30% from 2022. In the past five years, China’s edible ethanol capacity dropped by a total of 975kt/a. Long-term oversupply and profit fluctuations led to tight cash flow for enterprises, which became the main reason for the decline in edible ethanol capacity. From the perspective of production technology, the production of cassava-based ethanol was highly dependent on imported feedstock, and its cost competitiveness declined. Therefore, a total of 24 cassava-based ethanol enterprises withdrew from market supply in the past five years. As for molasses-based ethanol, many enterprises also withdrew from the market due to the large proportion of small capacity and lowest profit. According to SCI, China had 36 molasses-based ethanol enterprises in 2019, but there were only 18 by the end of 2023. As for grain-based ethanol, although the industry had relatively strong risk resistance, the market competition was fierce, so 11 grain-based ethanol enterprises withdrew from the market in the past five years.
Industrial ethanol capacity expanded in 2023 with accelerated commissioning.
According to SCI, China’s industrial ethanol capacity reached 1,414kt/a in 2023, up 500kt/a or 54.70% from 2022. The production technologies of industrial ethanol were diversified such as acetic acid-based technology and methanol-based technology, and the proposed capacity of methanol-based ethanol increased. Starting in 2022, the capacity expansion of industrial ethanol sped up. Since 2022, the 200kt/a unit at Henan Liyuan Coke Group and the 300kt/a unit at Shaanxi Yanchang Petroleum Yushen Energy & Chemical were successively put into production, establishing China’s ethanol industry as a leading position in global industrial ethanol process research, and also setting a new record of 500kt/a for a single unit in China’s ethanol industry. In addition, as of December 31, 2023, the 600kt/a unit at Anhui Tanxin Technology and 190kt/a unit at Sinopec Baling Petrochemical entered trial operation. In the future, China’s industrial ethanol capacity will continue to grow.
Industrial ethanol may change the traditional ethanol competition pattern in China.
In the future, industrial ethanol will mainly affect the fuel ethanol and anhydrous ethanol industries in the short and medium term, and the influence on the 95% ethanol industry mainly depends on quality and price.
The future development of the industrial ethanol industry mainly depends on policy, technical quality and cost. Policy is the long-term guide for the long-term development of the industry. In terms of production technology, the maturity of industrial ethanol technologies was different due to the diversification, and the acetic acid-based technology is relatively mature. In terms of product quality, the quality of acetic acid-based ethanol is closest to the quality of anhydrous ethanol produced by traditional production technology. There is still room for improvement in methanol-based ethanol technology in terms of product quality, but the economics of investment have yet to be considered.
Cost is a key factor for industry players to be optimistic about the long-term development of the industrial ethanol industry. If the price of grain-based ethanol does not decrease notably in the future, the cost of both acetic acid-based ethanol and methanol-based ethanol will be highly competitive. Methanol is one of the most important organic solvents in the industrial product field, so the global supply of methanol is large, and the price of methanol is low. In addition, with the capacity expansion of the industrial ethanol industry, the production profit of acetic acid-based ethanol was high in 2023, with a relative cost advantage compared to fermented ethanol.
From the perspective of technology and cost, the future impact of industrial ethanol on China’s ethanol industry will be mainly reflected in two aspects. First, the cost advantages will likely accelerate the integration of the edible ethanol industry, and small-capacity enterprises will continue to decrease. Second, taking into account the continuous progress of technology and the nearly saturated demand in the fuel ethanol industry, industrial ethanol may gradually enter downstream fields such as anhydrous ethanol. The future development of the edible ethanol industry may be based on the high-quality, high-standard, and high-threshold industry demand.
It is worth noting that with the further growth of industrial ethanol capacity, competition among different enterprises in the industrial ethanol industry will also intensify in the next three years. In order to accelerate product consumption, some enterprises are more likely to extend the industrial chain. The industrial ethanol industry may develop towards large scale and integration.
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