Fuel Ethanol Price to Stay at Highs Despite Mild Demand
The international crude oil price fluctuated at highs, and the prices of gasoline and other oil producers declined. The price of fuel ethanol dropped limitedly with cost support, and the demand trended flat.
In April, the international crude oil prices fluctuated within a certain range, and the ethanol price and demand trended flat. The lowest closing price of Brent was $98.48/mt on April 11, and the highest one was $113.16/mt on April 18. In addition, the gasoline demand was dragged down by decreasing driving out, and the prices of gasoline and oil products declined as well. The price of fuel ethanol declined first and then fluctuated narrowly, and the demand also showed a downtrend.
In April, as the main feedstock for fuel ethanol, the corn price continued the uptrend. At the end of April, the corn prices increased by RMB 125/mt from March. In addition, the fuel ethanol in Northeast China was mainly supplied by the producers in Heilongjiang, so the overall operating rate was not high and the price decline was limited. On April 29, the price declined by 4.30% compared from that on April 1.
From April to early May, despite the Qingming Festival and Labor Day holiday, few travels were seen. It’s heard that petrol stations mainly consumed their previous inventory, so both the purchases and sales of gasoline underperformed, affecting both the state-owned and independent refineries. As for Shandong market, the gasoline price declined first and then increased in April, while the price at Shandong independent refineries fluctuated widely. Most independent refineries purchased on a need-to basis in the week before the holiday, and the fuel ethanol inventory at independent refineries was consumed slowly around the Labor Day holiday. Most independent refineries replenished their stocks with a wait-and-see sentiment after the holiday.
Although the demand underperformed, the low-priced resources were consumed in April, and the cost and futures prices of energy products continued to support the fuel ethanol price. It’s estimated that the price of ethanol will inch down in the short term while it will fluctuate at highs despite the mild demand.
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