Unbalanced Ethanol Supply
After the Spring Festival, affected by the novel coronavirus, the enterprises at many provinces were postponed to return to work, and the ethanol participants showed weak interests in production. According to SCI, China’s ethanol operating rate was close to 35% before the Spring Festival, while it only increased by 3% to around 38% after the Spring Festival.
After the Spring Festival, the operating rate in East China stayed at lows. Compared with Jan 23, only two plants in Jiangsu restarted their units, while the restart date of other units was to be determined. However, the feedstock cassava slice participants held bullish sentiment, and the prices of cassava slice were $ 210-215/mt FOB in Thailand. Most ethanol plants are predicted to return to work after Feb 10, and the operating rate may not rise greatly in the short term.
In Central China, three top grade ethanol plants maintained the production in Jiaozuo, and the general grade ethanol units in Huixian were scheduled to restart after Feb 8. In Hubei, all the units were shut down. Additionally, the enterprises in Hubei cannot return to work before Feb 23. Therefore, the operating rate in Central China may move up after Feb 10.
In North China and Northeast China, most units operated normally during The Spring festival, and the operating rate was unchanged. In Northeast China, the operating rate was at a high level, and the resources were sufficient. After the Spring Festival, affected by the continually increasing prices of 95% ethanol, the prices in Northeast China changed slowly, and the price arbitrage window from Northeast China to East China was open.
In South China and Southwest China, the operating rate didn’t trend up. It was mainly because that according to the custom, the units were shut down for three to five days. Moreover, affected by the novel coronavirus, the plants’ restart date will be postponed.
At present, the demand for medicinal alcohol and disinfection product almost accounts for the total, and the recovery of the demand for chemical is slower than expected. According to SCI, as of FEB 2, China’s ethyl acetate daily operating rate declined to 24%, down 6% from that on Jan 23. In terms of ethylamine, most units in Shandong maintained the operation, and individual units in Zhejiang were shut down. In addition, some disinfector plants maintained the production during the Spring Festival, and the demand was favorable. As the whole, all the ethanol plants and traders actively devoted to meet the medicinal alcohol supply.
After the Spring Festival, the 95% ethanol prices at many regions trended up. Firstly, the restart date of some plants was postponed or to be determined. Secondly, the resources in producing areas were sufficient, while the resources in other areas were tight. Thirdly, some downstream participants didn’t prepare sufficient inventory. Lastly, the demand for medicinal alcohol and disinfection product rose. On the whole, SCI reckons that the 95% ethanol prices will trend up, and the logistics will have a great impact on ethanol prices.
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