SunSirs: Ethanol Market Prices Consolidated at High Levels in July

Price trend

According to the SunSirs’ commodity market analysis system, the domestic ethanol market saw a unilateral upward trend in July. From July 1 to 31, the average price of ethanol produced by domestic producers rose narrowly from 5,655 RMB/ton to 5,677 RMB/ton, a 0.38% increase over the period and a 5.58% year-on-year decrease.

Analysis review

At the beginning of July, the high cost support further deepened the cost pressure of ethanol, and the short-term on-site transactions were limited.

In early July, cost support weakened, some supply-side facilities were about to resume operation, and there was no significant change in downstream demand. The ethanol market was digesting the increase.

In mid-July, raw material corn prices fell slightly, weakening cost support. As of July 31, the domestic ethanol market was facing a weak supply and demand situation, and the ethanol market was mainly in a wait-and-see mode.

In late July, the domestic ethanol market price was stable. The quotations of some factories increased, but there were no actual orders. Due to the urgent need for purchase in the downstream chemical industry, the transaction price fell.

On the cost side, corn prices continued to rise in the first half of the month. As of July 31, the national weekly average price of corn was 2,437 RMB/ton, up 15 RMB/ton. Ethanol costs were impacted by favorable factors. Overall corn prices remained weak, market sentiment was subdued, and spot prices continued to decline. Ethanol costs provided unfavorable factors for the market.

On the supply side, edible ethanol production had seen little fluctuation. Production was continuing at the Huanan plant in Heilongjiang, one line was operating in Jixian, and the Laha plant resumed full capacity. The Bayan plant was shut down on the 29th. Both the edible and fuel plants at Wanli Runda had been shut down. Zhongke Green was producing, and the Shenglong plant had been shut down. The impact on ethanol supply was mixed.

On the demand side, downstream chemical prices had fallen slightly, leading to a decrease in ethanol consumption. This was a bearish factor affecting ethanol demand in the short term.

Future outlook:

Supply has seen both increases and decreases, and cost benefits have decreased. Ethanol analysts of SunSirs predict that the ethanol market will mainly be consolidated and wait-and-see in the short term.

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