Challenges and Opportunities Faced by Molasses-Based Ethanol Industry
China’s ethanol market confronted with fierce competition, and the supply remained excessive. The molasses-based ethanol industry faced not only the shrinkage of demand, but suffered the cost pressure from feedstock and liquid waste disposal. Therefore, SCI holds that the reintegration of molasses-based ethanol industry will begin.
The production cost at molasses-based ethanol distilleries in Yunnan stayed lower than that in South China. Recently, the operating rate of molasses-based ethanol units in South China remained at a low level, hovering around 20%. According to SCI, this was mainly caused by two factors.
On one hand, the demand from downstream white sprits enterprises weakened, and the molasses-based ethanol industry was faced with competition from other ethanol varieties, especially the ethanol from Pakistan.
On the other hand, the molasses-based ethanol industry came under great pressure from the production cost, especially the cost from liquid waste disposal. The equipment for waste disposal was costly, and the distillation process was energy intensive.
SCI holds that some ethanol enterprises will be eliminated by the current intense competition within the industry. By then, the molasses-based ethanol distilleries will experience further integration and have strong pricing power.
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