95% Ethanol Price Kept Rising on Strong Demand
With the ethanol consumption rising in the medical fields for disinfection and sterilization, ethanol prices in most areas continued to increase, registering a largest weekly increment in H2 of 2022. China’s ethanol output was stable, while the regional distribution was uneven, so the rises differed. Later, with the upcoming traditional downstream replenishments for the Spring Festival, the ethanol price will likely stay at a high level. In addition, the rapid rising ethanol price will bring some pressure on the traditional downstream chemical industries.
Supported by strong demand, ethanol prices in most areas trended up continuously. The price in Henan rose by over 6% within 5 trading days to RMB 7,000-7,200/mt on December 16 (tax included). The offers on December 17 further increased to RMB 7,400-7,700/mt (tax included). China ethanol output was stable, while the regional distribution was uneven, leading to different price rises.
With the rising ethanol price, the transactions in Jilin improved notably. However, profits of ethanol production in different areas differed. Taking the corn-based ethanol production as an example, only producers in Henan saw positive profits, while those in Jilin and Heilongjiang suffered profit losses. According to SCI, the profit of ethanol production in Henan was RMB 430/mt in Henan on December 16, while that in Jilin and Heilongjiang was RMB -174/mt and RMB -162/mt respectively.
As of December 17, China’s daily output of edible and industrial ethanol was 21,460mt, and that of edible ethanol was 18,240mt. The output in Northeast China took up the largest proportion of 35%. The price increment in Jilin was merely RMB 50/mt, lower than that in other areas. Currently, sales in Henan, East China and Shandong were favorable, especially in Henan, while the delivery of some orders in Northeast China was interrupted by the transportation. Currently, the transportation fee from Northeast China to North China and East China rose to a yearly high.
Some market participants worry that the demand may last for a short time. SCI reckons that the demand may last for a longer time compared with that in 2020, which will improve first and then decline. Considering the upcoming downstream replenishments for the Spring Festival, it’s estimated that the ethanol price may stay at a high level for another 1-2 weeks.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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