Cassava Ethanol Prices Face Downward Pressure in East China

Since last Friday, the cassava-based ethanol prices had begun to fall back in East China, as of this Thursday, the prices dropped by 3% to RMB 175/mt.

It was heard that some major downstream chemical factories in East China started to order goods from Northeast China last month, thus, the purchase volume of the cassava-based ethanol was likely to decline in East China this month. Besides, some downstream units in Zhejiang were adjusted slightly, causing the decrease of enquiries for East China’s cassava-based ethanol. The sales at local distillers were still weak, edging up the inventory to some extent.

With the exception of East China, Henan’s ethanol prices dropped notably last week. On the one hand, influenced by the snowy weather, the traffic was disrupted in this region and surrounding areas, impeding the sales of the ethanol. On the other hand, the white spirits demand from Southwest China was tepid. This week, however, with the price advantage of RMB 5,700/mt (tax included), the sales of the premium-grade ethanol in Henan exerted an influence on the sales of cassava-based ethanol in Shandong.

In addition, Northeast China’s corn-based ethanol also had an increasing impact on East China’s ethanol market. The operating rate was high, remaining at 70%-80%. The unit at Nehe Hongzhan New Energy ran normally, and the daily output was about 300-400mt. This week, the ethanol prices trended downwards in Northeast China, with RMB 5,250-5,300/mt tax included in the eastern region of Heilongjiang and RMB 5,600-5,900/mt in Jilin.

Looking ahead, market participants will hold bearish sentiment towards East China’s ethanol market in the short term. In H2 January 2018, the offer for the Thailand-origin cassava slice FOB Bangkok is expected to be USD 215/mt, up USD 3/mt from earlier January.

Recently, the ethanol prices continued dropping, and the demand was tepid. It is predicted that the cassava-based ethanol prices are likely to further decline.