Aug Edible and Industrial Ethanol Output Fell to Second Lowest Point of the Year
Introduction: In August 2024, China’s edible and industrial ethanol output fell to 483kt, down 13.92% from July, the second lowest point of 2024. The decline in China’s edible and industrial ethanol output in August was mainly affected by the increase in annual unit maintenance. In addition, the continuous production losses and the demand peak season caused low production enthusiasm of ethanol producers. In September, the maintenance of ethanol units will decrease, but the improvement in profit will be limited. Therefore, the output of edible and industrial ethanol may only see a small increment.
China’s edible and industrial ethanol output dropped to the second lowest point of the year. According to SCI, the output of edible and industrial ethanol was 483kt in August 2024. In the first half of August, the downstream industries were in the slack season for demand, and the weather was hot, affecting the production of ethanol. Therefore, some ethanol units in Central China, East China and Northeast China were arranged with annual maintenance. In addition, from the monthly profit, the production profit of corn-based ethanol was at the lowest level since 2017, with an average profit of RMB -450/mt in Jilin in August. In terms of other processes, the production of cassava-based ethanol has been loss-making for 19 consecutive months. Affected by this, the output of edible and industrial ethanol fell to a low point in August.
In August, the output of different grades was mixed. The output of general-grade ethanol, premium-grade ethanol and anhydrous ethanol accounted for 29%, 32% and 39% respectively of China’s edible and industrial ethanol output, down 6 percentage points, unchanged and up 6 percentage points respectively from July. From the perspective of output proportion, the proportion of general-grade ethanol output declined, which was mainly influenced by the increase in unit maintenance and the decrease in demand. The increment in the proportion of anhydrous ethanol output was mainly due to the larger decrement of about 78kt in overall edible and industrial ethanol output in August, about 78,000 tons, while the output of anhydrous ethanol in August was only 120mt less than that in July. China’s anhydrous ethanol output in August 2024 was 186.4kt, of which anhydrous ethanol produced by fermentation dehydration accounted for only 27%, and the decrease in proportion was mainly affected by the annual maintenance of the unit and demand. The output of coal-based anhydrous ethanol accounted for 63%, the highest proportion in the month recorded this year. On the one hand, the annual maintenance of coal-based ethanol units was completed in Q2, and the units ran more stably in August. On the other hand, although the production profit was not high, the cost of coal-based anhydrous ethanol was lower than that of anhydrous ethanol produced by the fermentation dehydration process. Therefore, some downstream enterprises have gradually begun to accept coal-based ethanol, stimulating the production interest of coal-based ethanol enterprises.
In Northeast China, the proportion of ethanol output and the proportion of grain-based ethanol output both slipped in August. According to SCI, the output of edible and industrial ethanol in Northeast China, Central China and East China ethanol accounted for 19%, 25%, and 34%, respectively, down 12 percentage points, up 3 percentage points, and up 5 percentage points from July. As the largest production area of ethanol, Northeast China ranked only third in terms of the output proportion in August. This was mainly because ethanol in Northeast China was mainly based on the grain fermentation process. Against the background of expanding production losses, it was common for enterprises in the region to shut their units down for maintenance or to reduce output. Although there were also large output losses caused by the unit shutdown, the new coal-based ethanol unit ran stably, so the output proportions in East China and Central China took second and third places.
China’s edible and industrial output will increase slightly in September, mainly supported by the end of unit maintenance, and it is also necessary to pay attention to the commissioning of new coal-based ethanol units. As of the end of August, most ethanol units have completed annual maintenance, and the enterprises may resume production. In addition, the price of corn before the current round of shutdowns is not low, and before the new grain is put on the market in Q4, corn deep processing enterprises usually need to consume old corn. Therefore, the enterprises under shutdowns have gradually shown their willingness to resume production in late August. However, SCI still expects that the output of edible and industrial ethanol will be low in September. Due to the large production loss, even if the price of co-product DDGS rises, the profits of ethanol enterprises will be restored, but considering the low probability of a sharp rise in ethanol prices, the production profit will not turn positive. From the demand, downstream demand is reckoned to grow in September, and the end demand will generally improve, but the replacement of fermented ethanol by coal-based ethanol will continue, which will have a limited boost to the output of fermented ethanol. Overall, SCI predicts that the output of edible and industrial ethanol in September may be between 500kt and 530kt, an increase of 17kt to 47kt from August.
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