Diversified Ethanol Import Pattern Being Shaped

Customs data showed, in Q1 2018, China’s import volume of the denatured and undenatured ethanol reached 395.9kt, taking up 18% of China’s ethanol supply in Q1 2018. Among them, the denatured ethanol import volume reached 339.6kt. It was worth noting that China’s imported ethanol volume was less than 10kt in 2017. With the increased tariffs imposed on the imported goods from the U.S., China’s fuel ethanol import volume dropped from Q2 2018, and China’s supply sources remained diversified.

Since the trade relations between China and the U.S. became tense from April 2018, both of them began to impose tariffs on each other. Meanwhile, the ethanol entered into the list of the goods from the U.S. that were imposed on additional tariffs for three times. Recently, China’s tariff on the denatured ethanol from the U.S. rose from 30% at the beginning of 2018 to 70% recently, and the tariff on the undenatured ethanol was raised from 40% to 65%, exerting profound influence on China’s ethanol import volume and supply sources.

Therefore, China’s ethanol supply sources diversified from Q2 2018. According to SCI, the fuel ethanol import volume in Zhejiang from May to August was at least 180kt. Some countries that made the agreement in terms of the conventional tariff rates with China firstly appeared in the list of China’s supply sources such as Costa Rica, Peru and Malaysia.

With the ethanol gasoline promotion in Tianjin entering into the transition period, Tianjin would start the closed management and operation of the ethanol gasoline from October. According to the related document issued by Tianjin government, the annual demand for the fuel ethanol in Tianjin was estimated to be around 260kt, based on 10% ethanol proportion. Moreover, China government proposed to expand the ethanol gasoline promotion further in 15 provinces including Beijing, Tianjin and Hebei etc. on August 22. If Beijing began to promote the ethanol gasoline, the future demand for the fuel ethanol in Beijing was forecasted to be near 500kt.

Therefore, considering China’s huge fuel ethanol demand in the future, if the relationship between China and the U.S. continues to remain tense and China still controls the fuel ethanol production qualification, China may diversify the import sources continually.