Fuel Ethanol Price Climbed amid Rising Supply and Demand in Early 2023
In January, fuel ethanol prices in Northeast China and Shandong recovered affected by the rising demand. The ex-works price of fuel ethanol in Heilongjiang rebounded from a low level. As of February 3, 2023, the average price was RMB 7,025/mt, up RMB 625/mt from that on December 30, 2022. With the profit recovering, ethanol producers showed increasing production enthusiasm, and most fuel ethanol producers raised their operating rates in January, improving the output. Meanwhile, the demand for ethanol gasoline continued to increase after the Spring Festival.
In early 2023, the fuel ethanol price in Northeast China rebounded, mainly supported by the recovering demand, and that in Heilongjiang rose to around RMB 6,900-7,150/mt, up RMB 625/mt or 9.77% from that on December 30, 2022. The rising fuel ethanol price improved the production enthusiasm of fuel ethanol producers, and the output increased accordingly in Northeast China and Henan.
From January, the fuel ethanol price rose rapidly, and the corn price inched down, reducing the production cost of fuel ethanol. Therefore, the profit turned from negative to positive gradually. Meanwhile, in February, the profit from producing fuel ethanol was higher than that from edible ethanol. According to SCI, on February 3, the gross profit of fuel ethanol production was RMB 174/mt, up 143% from the end of December. However, the production of 95% corn-based ethanol saw a profit loss of RMB 76/mt on February 3. It’s estimated that the profit from producing fuel ethanol may remain positive in the short term.
Supported by favorable profits, ethanol enterprises showed increasing production enthusiasm for fuel ethanol, so the daily output increased from January. According to SCI, China’s fuel ethanol output in January 2023 reached 289.07kt, up 56.25% M-O-M. The demand will continue to improve and profits will remain positive. Therefore, it’s estimated that the production enthusiasm of fuel ethanol producers will at least remain high in H1 of February, and may start to fall in March affected by unit maintenance.
Usually, the demand has a strong impact on the fuel ethanol price. It’s estimated that the demand for fuel ethanol will likely reach over 270kt, which will support the fuel ethanol prices to stay at highs. In Q1, the refined oil demand may remain robust. After the Spring Festival holiday, the gasoline demand will trend flat with short-distance travel, which will affect the demand for ethanol gasoline. In addition, the supply of fuel ethanol will improve, so China’s fuel ethanol price will continue to rise within a narrower range.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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