Ethanol Price Trends to Be Different After Spring Festival Holiday
Preface: The Spring Festival is approaching, and ethanol producers have successively announced their production arrangements. Compared with last year, downstream producers stock up later than in last year and the purchase volume is small. Therefore, ethanol producers are more cautious about arranging their production during the Spring Festival holiday of 2024. At present, the inventory of the ethanol industry remains low, and the ethanol output is expected to decrease during the holiday. After the holiday, ethanol prices in southern China and northern China will differentiate amid different supply-demand patterns. The ethanol price in northern China is likely to drop, while that in northern China may fall back after stabilizing.
According to SCI’s survey, among the 109 sample producers selected, 32 producers plan to maintain production during the Spring Festival holiday, a decrease of 5 producers from last year. Only in Central China, the number of producers that will maintain production during the holiday increases from the same period last year. The decrement in the number of producers that will maintain production during the holiday is the most obvious in Northeast China, and that in North China will be unchanged.
East China: The number of producers halting production during the holiday will inch up, and the ethanol output in February is expected to decrease M-O-M and Y-O-Y.
The number of producers in East China that will maintain production during the holiday decreases by 1 from last year. Currently, the production profit of cassava-based ethanol is negative, and the ethanol producers have low production enthusiasm. In southern Jiangsu, most ethanol producers plan to stop production, and in northern Jiangsu, Anhui and Jiangxi, the number of producers that will stop production during the holiday changes little with the shutdown time of a small number of producers earlier than in previous years. The 31 sample producers in East China selected by SCI have a total capacity of 3,548kt/a, and 10 of them are going to maintain production during the holiday with a total capacity of 1,490kt/a, down 180kt/a Y-O-Y. Overall, SCI predicts that the output of edible and industrial ethanol in East China may be 78.9kt in February, down 24.9kt M-O-M and 46kt Y-O-Y.
Northeast China: Most ethanol producers will be in production during the holiday, and the ethanol output is expected to decline M-O-M and Y-O-Y in February.
The number of ethanol producers maintaining production during the holiday in Northeast China will drop by 3 from last year. At present, the producers under production have no shutdown plans, but the number of small producers that will suspend production rises. The 24 sample producers in Northeast China selected by SCI have a total capacity of 4,198kt/a, and 8 producers plan to maintain production during the holiday with a capacity of 2,475kt/a, down 160kt/a Y-O-Y. Overall, SCI predicts that the output of edible and industrial ethanol in Northeast China may be 198.1kt in February, down 24.9kt M-O-M and 6.4kt Y-O-Y.
Central China: The number of ethanol producers maintaining production during the holiday will mount, and the ethanol output in February is expected to slide M-O-M but increase Y-O-Y.
The number of ethanol producers that will maintain production during the holiday in Central China rises by 2 from last year. The 14 sample producers in Central China selected by SCI have a total capacity of 2,631kt/a, and 7 producers plan to maintain production during the holiday with a capacity of 1,816kt/a, up 250kt/a Y-O-Y. Overall, SCI predicts that the output of edible and industrial ethanol in Central China may be 98.5kt in February, down 29.2kt M-O-M but up 18.4kt Y-O-Y in line with the capacity expansion in 2024.
South China: The number of ethanol producers that will halt production during the holiday rallies, and the ethanol output in February is expected to slip M-O-M and Y-O-Y.
The number of ethanol producers maintaining production during the holiday in South China will fall by 2 from last year. The 19 sample producers in South China selected by SCI have a total capacity of 971kt/a, and 2 producers plan to maintain production during the holiday with a capacity of 136kt/a, down 200kt/a Y-O-Y. Overall, SCI predicts that the output of edible and industrial ethanol in South China may be 143kt in February, down 21.7kt M-O-M and 20.7kt Y-O-Y.
Southwest China: The number of ethanol producers that will suspend production during the holiday increases, and the ethanol output in February is expected to lower M-O-M and Y-O-Y.
The number of ethanol producers maintaining production during the holiday in Southwest China will drop by 1 from last year. The 12 sample producers in Southwest China selected by SCI have a total capacity of 726kt/a, and 1 producer plans to be in production during the holiday with a capacity of 20kt/a, down 60kt/a Y-O-Y. Overall, SCI predicts that the output of edible and industrial ethanol in Southwest China may be 17.7kt in February, down 25.7kt M-O-M and 20.4kt Y-O-Y. In addition, major molasses-based ethanol producers in Yunnan plan to resume production in the middle of February, and those in Sichuan are going to resume production in the second half of February.
Post-holiday: Ethanol production may recover slowly, and price trends may differ in different regions.
Ethanol supply and demand will change during the Spring Festival holiday, and the recovery after the holiday will be slow. At present, most ethanol producers in East China and South China will not resume production before February 15, and those in Henan and Southwest China may be back running normally after February 25. In terms of supply, the ethanol supply in Northeast China and Central China will likely be sufficient during the holiday, while that in East and South China may be tight. In terms of demand, most of the major downstream chemical producers with shutdowns plan to start purchasing ethanol after February 19. Before the holiday, downstream producers replenish their inventory at a low level due to the bearish sentiment about the feedstock price after the holiday. Therefore, some downstream producers may purchase ethanol according to their rigid demand after the holiday. In terms of market sentiment, most players in Northeast China hold a bearish sentiment about the post-holiday market, while players in East China have a bullish stance because of the tight supply before the holiday.
On the whole, the spot supply in East China may be slightly short in the second half of February, while that in Northeast China and Henan will be surplus. Considering that automobile transportation will recover quickly after the holiday, the shiploads may successively arrive in East China from Northeast China. Therefore, it is predicted that the ethanol price in East China may open stably after the holiday. However, if shipping and automobile transportation are smooth, the ethanol price may fall back in the second half of February. In Northeast China and Henan, the ethanol price is expected to go down after the holiday because some ethanol producers may show strong intentions of sales caused by the high inventory during the holiday.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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