Ethanol Price in Major Producing Areas Restarted the Rally

Ethanol Price in Major Producing Areas Restarted the Rally

The ethanol prices in major producing areas rebounded in late February, and the offers in East China and Northeast China saw successive hikes from March.    

In mid-and-late February, the ethanol prices in major producing areas went up after the Spring Festival holiday, followed by successive price rises in the first week of March. In Heilongjiang, the prices at large enterprises in some regions mounted by RMB 100/mt. Buoyed by the price increases at large enterprises, small enterprises were more reluctant to sell at low prices.           

In Jilin, the low-end offers moved up for two successive days and reached RMB 5,000/mt, driven by the price hikes in Northeast China. The negotiation dealing prices of spot ethanol resources in Northeast China started to move towards the medium-and-high ends. Moreover, the cassava slice price remained firm. Therefore, the cassava-based ethanol price in East China was close to thehigh-ends.             

The successive price increases of ethanol in major producing areas were mainly driven by the price rises in Northeast China. In Jilin and Heilongjiang, major large enterprises focused on the production of previous orders, and the stock level remained low, leading to the supply tightness of spot ethanol resources. In East China, the cassava-based ethanol price came under great pressure due to the production losses. The cassava-based ethanol units in most regions were restarted slowly, and the operating rate hovered around 20%. Major cassava-based ethanol distilleries held low stocks.

According to SCI, considering the price co-movement between East China and Northeast China, the price decrease in Northeast China will weigh on the price in East China in the future. However, SCI predicts that the price in Northeast China will stabilize somewhat.          

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