Ethanol Price in South China May Benefit from its Feedstock

With the crushing season approaching recently, the molasses-based ethanol distilleries in South China were ready for restarting the units. However, the declined ethanol price in Henan, coupled with the decreased offers of imported ethanol and the sharply reduced demand from downstream small and medium wineries weighted on the ethanol price in South China. Nevertheless, the molasses price might trend down following the crushing season, helping alleviate the cost pressure on ethanol production in South China.

Recently, the ethanol price in Henan inched down. Thus, the major consumption regions of the molasses-based ethanol from Guangxi, such as Sichuan and Guizhou were squeezed by ethanol from Henan that was more price competitive.    

Moreover, the offers of imported ethanol in Guangdong dipped slightly recently, and the mainstream dealing price was around RMB 5,550/mt.

According to sources, the overall demand from major downstream chemical industries remained not quite different from that of last year, and the sales were based on rigid demand. However, the demand from another major downstream user, the white spirits industry, kept weak in H2, 2018. Especially for the procurement from some small and medium downstream white spirits producers, dropped substantially. Therefore, the overall sluggish demand exerted some influence on the ethanol price.     

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