Fuel Ethanol Price to Keep Rising
In December, China’s fuel ethanol price rebounded in Shandong while continued the downtrend in Northeast China. The prices in these two regions both improved in January. With the improved gasoline demand, the demand for ethanol gasoline also increased. In addition, as the operating rate at fuel ethanol producers was not high caused by low ethanol prices and poor profits, the supply was limited before the Spring Festival, pushing up the market price. With the fuel ethanol price rebounding in Northeast China, the operating rate may also improve.
From December, the fuel ethanol price in Shandong increased. As of January 6, the weekly price of fuel ethanol in Shandong was RMB 7,140-7,400/mt, up RMB 320/mt or 4.6% from early December. The price in Northeast China declined in December while increased in January. As of January 9, the market price of fuel ethanol in Northeast China was RMB 6,700-6,800/mt, up RMB 350/mt or 5.5% from end December. In the short term, the fuel ethanol price will mainly be affected by supply and demand.
In January, China end demand for fuel ethanol recovered. The improving gasoline demand pushed up the gasoline price. Therefore, independent refineries in Shandong replenished their stocks proactively before the Spring Festival, and the fuel ethanol demand from the state-owned refineries also improved.
It’s estimated that the fuel ethanol may trend up in the future, while the increment will be limited. The supply and demand will be the main price drivers. With the increasing price and improving profit, the operating rate of the fuel ethanol industry may gradually recover.
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