Can Thailand’s Policy Boost Cassava-Based Ethanol Market?
In November, Thailand announced a new subsidy policy for cassava. And the policy will come into effect on December 1. Thailand government will provide a budget of THB 9.67 billion during the cassava harvest season from 2019 to 2020. In the cassava growing areas across the country, the subsidy is THB 2.50/kg and no more than 100 mt per household. The cassava prices will be influenced by the policy, and the China’s cassava-based ethanol industry will see changes.
The export of cassava slice is restricted by the high prices of fresh cassava. In 2019, China’s cassava slice import volume is 2,445kt from January to October, down 1,783kt or 42.17% Y-O-Y. Most fresh cassava resources flow to the cassava-based starch industry. As a result, the cassava slice and cassava-based ethanol are restricted by the cost, and the profits and production are sluggish. In the long term, the fresh cassava industry is overly dependent on cassava-based starch. Once China decides not to purchase cassava slice from Thailand, the cassava slice demand and export volume in Thailand will be seriously influenced.
As for the China’s ethanol industry, there is a total capacity of more than 13,000kt, and the cassava-based ethanol capacity can reach 4,845.5kt. However, it is estimated that the cassava-based ethanol output will be around 1,000kt. Affected by the production losses in 2018 and 2019, the production enthusiasm at cassava-based ethanol enterprises goes down significantly. As of November 29, the operating rate of cassava-based ethanol in China was 11%. The enterprises can avoid the production losses by purchasing resources from Northeast China. In 2020, if the small and medium scale cassava-based ethanol enterprises cannot break even, they will not start their production units.
Influenced by the environmental protection and safety supervision, in 2020, the cassava-based ethanol enterprises which meet the operation requirements decreased greatly from 2018. In the recent two years, the cassava-based ethanol enterprises with the total capacity of 1,000kt have the ability to produce corn-based ethanol and cassava-based ethanol, and the production feedstock depends on the cost.
On the whole, most participants considered that in 2020, with the decreasing prices of cassava slice in Thailand, China’s cassava-based enterprises production losses may decrease. As for the output, corn is the key factor influencing the cassava-based ethanol output. In 2020, the corn prices will continued increasing, and the cost gap between cassava-based ethanol and corn-based ethanol will narrowed. However, the cassava-based ethanol output is difficult to improve.
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