Molasses-Based Ethanol Industry Saw High Price but Low Output
In 2022, the molasses-based ethanol industry saw record high prices while the production suffered profit losses. In addition, downstream feedstock purchases also faced new difficulties.
As H2 May, with the end of crushing season, China’s molasses-based ethanol production also came to an end. The price of molasses-based ethanol was high while the output was low. On the one hand, the price hit a record high. The price of molasses-based ethanol in Guangxi rose to RMB 7,800-8,000/mt in May, up 8.59% from the beginning of the year. On the other hand, the supply was curbed by the feedstock. Producers suffered profit losses amid high prices of molasses-based ethanol. Therefore, the output of molasses-based ethanol in 2022 is likely to hit a 9-year low.
Affected by the cost, the price of molasses-based ethanol has reached a record high in 2022. The price in Guangxi ran within the range of RMB 7,100-8,000/mt in 2022, and the average price was RMB 7,445/mt, up 2.68% Y-O-Y. The feedstock price exerted important impact on the price of molasses-based ethanol. The price of molasses kept rising during this crushing season (from November 18, 2021 to April 23, 2022). Both the number of molasses producers and crushing hours declined from last season, and the output showed a downtrend as well. As a by-product, the output of molasse was directly related to that of cane sugar. It’s estimated that the output of molasse will be 2,040kt, down 60kt from last season. Meanwhile, other downstream demand for molasse in China also improved notably. As of May 20, the delivered price of molasse in Guangxi was RMB 1,568.4/mt, up 8.29% Y-O-Y.
The profit losses during this crushing season enlarged compared with the same period of previous years, and the output of molasse-based ethanol showed a downtrend year by year. According to SCI, the average profit in 2022 was RMB -995/mt, while that in 2021 was RMB -629/mt. In 2022, among all the ethanol production technologies, only the production of molasse-based ethanol saw profit losses. The profit of producing cassava-based ethanol was RMB 457/mt and that of producing corn-based ethanol was RMB 83/mt. However, the production of molasse-based ethanol saw a long-term profit loss, so less producers were in normal production. During this crushing season, merely 9 molasse-based ethanol producers were in production, which was an eight-year low.
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