Q2 2025 Edible and Industrial Ethanol Price to Be Mixed
Looking ahead to Q2 2025, factors affecting the ethanol market will be cost fluctuations, supply and changes in end demand.
It will be difficult to significantly ease the cost pressure on the production of grain-based ethanol, and the cost of cassava-based ethanol may rise.
The production of grain-based ethanol is expected to remain loss-making in Q2. The cost may fall, but the range will be limited. The supply of corn will likely increase in April, but traders’ resistance to price cuts will curb the decrement in corn prices. Therefore, corn prices are reckoned to drop slightly. In May, players can pay attention to traders’ sales and warehouse clearance before the wheat harvest in North China. The supply of corn may increase periodically, dragging down the price. In June, traders’ corn inventory will gradually decrease, and the wheat harvest in North China may affect corn supply, so corn prices may trend up after mid-June. As for the cost of cassava-based ethanol, it may grow in Q2. The transaction of cassava slices is active, with ethanol and feed plants being motivated to purchase. With the continuous production of cassava-based ethanol in China, the demand for cassava slices will continue. Moreover, Thailand will enter the rainy season at the end of April. After the cassava slices are put into storage, the price will hardly go down and rise.
There is a high probability that grain-based ethanol units will be overhauled ahead of schedule in Q2, and industrial ethanol output will continue to grow.
It is expected that the output of edible and industrial ethanol will grow in Q2, and the growth will mainly come from synthetic ethanol. The production loss of grain-based ethanol in Q1 was large, which may cause some units to take maintenance in advance. Usually, ethanol producers arrange overhauls in July and August, but due to poor profits, the number of producers that suspend or limit production in Q2 may increase. Although a small number of units will be overhauled in April, it is expected that the output may decline in May and June. As for cassava-based ethanol, the output is anticipated to increase in Q2. Some producers have relatively sufficient feedstock for ordering, and cassava-based units in East China will run stably without the long holiday impact. As for synthetic ethanol, the output is expected to level up in Q2. No new capacity will be put into production in Q2, but the unit maintenance plan may be less than that in Q1. Only a small number of units are scheduled for overhaul in April, and no overhaul arrangements have been heard for May and June.
The recovery of end demand in Q2 is in doubt, and the market mentality is relatively cautious.
The demand for ethanol in Q2 is predicted to be better than that in Q1, but the growth rate will not be high. Usually, the demand for ethanol from the downstream chemical industry in Q2 is slightly better than that in Q1, but the demand at home and abroad faces many challenges. From the perspective of domestic demand, end consumption may still be sluggish. Although there is no clear downstream maintenance plan for Q2, the profit from producing downstream products is not good, which will limit the downstream users’ ability to accept the high price of ethanol. In terms of foreign demand, some downstream enterprises have exported first in Q1, and the industry is worried that the export volume in Q2 will not be as good as the same period last year. In addition, in the food field, the liquor industry continues to undergo integration, which will hardly provide support for the ethanol market.
The price of 95% ethanol may fluctuate within a narrow range in Q2 2025.
95% ethanol prices are predicted to fluctuate in Q2, and there is a probability of falling first and then rising. In addition, affected by the different process costs, the differentiated characteristics of ethanol price trends in different regions will be more obvious. In April, the downward risk of ethanol prices will increase. The increase in supply is expected to be larger than that in demand. Although the grain-based ethanol industry will reduce output, the increase in synthetic ethanol output will be larger. Therefore, the downward risk of ethanol prices will increase in mid-to-late April. However, affected by limited ease of cost pressure on grain-based ethanol production, it is expected that the ethanol price in Northeast China will not fluctuate much, while the price in East China, which is closer to the consumption area, will see larger room for a downward trend. In May, attention should be paid to whether the output reduction in the grain-based ethanol industry will be expanded. However, as the output of synthetic ethanol gradually stabilizes, competition in East China will remain obvious. It is expected that the price in East China will continue to be weak in May, and if the shutdown rate in Northeast China rises, the price may fluctuate limitedly. In June, if the cost support for grain-based ethanol strengthens, attention will be paid to the possibility of driving ethanol prices up.
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