A new round of high-level Sino-US economic and trade consultations ended on 11 October. According to the news from the Ministry of Commerce, under the guidance of the important consensus of the two heads of state, the two sides conducted frank, efficient and constructive discussions on economic and trade issues of common concern. The two sides have made substantial progress in the fields of agriculture, intellectual property protection, exchange rates, financial services, expanding trade cooperation, technology transfer, and dispute settlement. The two sides discussed the follow-up consultation arrangements and agreed to work together in the direction of final agreement. For China’s ethanol market, since 2016, the United States has been the most important source of fuel ethanol in China except for 2017 and 2019.
The arbitrage window between the US and China is still closed. In the future, whether the two countries' fuel ethanol prices can return to its peak is still uncertain. However, the price of China’s ethanol was still low in China with no import from the US. Therefore, the supply of fuel ethanol increased faster than the demand.
Substantial progress in this negotiation between China and the US may also bring about changes in the exchange rate of RMB, which will reduce costs for the import of ethanol and the import of ethanol feedstock.
In summary, after more than a dozen rounds of trade negotiations, the US and China have finally made substantial progress, which is beneficial for both China and the US.
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