SunSirs: Ethanol Market Review for 2025 and Outlook for 2026

Introduction: Ethanol, commonly known as alcohol, can be divided into edible alcohol and industrial alcohol according to its production method. Edible alcohol is produced by fermenting edible grains and yeast in fermentation tanks, followed by filtration and distillation. It is usually an aqueous solution of ethanol and does not contain toxic substances such as benzene and methanol. Industrial alcohol is ethanol obtained by cracking long-chain organic compounds from petroleum under the action of catalysts and high temperatures. To distinguish it from edible alcohol, industrial alcohol contains a certain amount of methanol and other toxic organic substances, and there are also clear labels and instructions on the packaging. The ethanol specifications monitored by SunSirs are food-grade ethanol with a 95% content.

Price trend

According to data monitored by SunSirs' commodity market analysis system, the domestic ethanol market in 2025 showE weak supply and demand, with price fluctuations within a range. The average annual price was 5,392.20 RMB/ton, with a high of 5,698.89 RMB/ton and a low of 5105.00 RMB/ton, representing a maximum fluctuation of 11.6%. The price increased by 5.01% from the beginning to the end of the year. Limited cost support, ample supply, and weak demand limited upward price momentum. In 2026, a downward adjustment is expected, with periodic selling pressure from corn impacting costs, difficulty in boosting demand, and continued increases in supply. Only winter logistics may cause localized, temporary fluctuations.

Specifically:

First half of the year: The domestic ethanol market showed a volatile upward trend, mainly driven by cost-side factors and a temporary tightening of supply. Raw material corn prices remained stable to slightly strong, coupled with concentrated plant maintenance within the industry, leading to a temporary shortage of market supply. Ethanol prices rose accordingly, with price increases gradually spreading from the Northeast production region to the East China consumption region. However, due to the interplay of market supply and demand, the overall price increase was limited.

Second half of the year: The ethanol market showed significant divergence in trends, with overall prices under pressure and trending weaker. In the third quarter, increased market supply, continued weak downstream demand, and a simultaneous decline in raw material costs, combined with multiple negative factors, led to a volatile downward trend in ethanol prices; in the fourth quarter, domestic ethanol plant operating rates steadily recovered, leading to increased market production. However, insufficient support from rigid demand and the continued weak market structure resulted in ethanol prices remaining weak and consolidating, with only some regions experiencing minor price fluctuations due to local supply and demand disruptions.

At the end of 2025, the main factors influencing the development of the domestic ethanol market were as follows:

In terms of costs, corn, the main raw material for bio-fermented ethanol, was experiencing stable to slightly weaker price fluctuations. Purchasing and selling activity at the grassroots level was sluggish.  With the new season's corn coming onto the market, supply was abundant, weakening the cost support. For cassava chips, the supply of raw materials for cassava ethanol was tight, leading to high prices and continued production losses, thus limiting output. Ethanol prices were significantly influenced by raw material prices.

On the supply side, in recent years, ethanol has become a necessity in people's daily lives as a primary disinfectant, with the proportion of medical-grade alcohol increasing significantly, making it one of the main uses of ethanol. Currently, the supply of medical-grade alcohol is sufficient to meet people's needs, and price spikes due to insufficient supply are rare. By 2025, the total domestic ethanol production capacity reached 18.33 million tons/year (a 15.6% increase compared to 2023), primarily due to the release of coal-based ethanol production capacity, which increased its share to 21.82%, while bio-fermentation ethanol production capacity remained stable. In terms of output, cumulative production from January to October reached 5.7093 million tons (a 2.9% year-on-year increase), with an average operating rate of 42.77%. Operating rates and production continued to increase in the fourth quarter, but there was a significant differentiation in production processes, with a significant increase in coal-based ethanol production, while bio-fermentation ethanol production fluctuated considerably due to cost and policy influences. Overall, the supply situation had a moderate impact on prices.

On the demand side, demand in the chemical industry continued to grow, driven by the release of new production capacity for downstream products such as ethyl acetate and methyl ethyl carbonate, leading to increased ethanol consumption. However, some products were facing pressure due to cost constraints. Demand in the fuel sector peaked in 2024 and declined in 2025, mainly due to the development of new energy vehicles and policy adjustments, although the promotion of ethanol-blended gasoline in some regions still provided some support. In the food sector, demand for baijiu (Chinese liquor) was slightly declining, while demand for low-alcohol beverages was increasing, resulting in a stable overall consumption in the food sector. Ethanol prices were influenced by seasonal factors related to demand, such as the peak season for baijiu consumption, which leads to a significant increase in ethanol prices.

Regarding imports and exports, data for January-November 2025 shows: on the import side, 775.791 tons of unadulterated ethanol were imported (from Georgia, Germany, and South Korea), and 241.72 tons of denatured ethanol were imported (from France, Brazil, and the United States); on the export side, 53,514.932 tons of unadulterated ethanol were exported (to the Philippines, Saudi Arabia, and Singapore), and 1,889.086 tons of denatured ethanol were exported (to South Korea, India, and Taiwan). Due to the extremely low proportion of total imports and exports compared to the domestic market supply and demand, the annual ethanol price trend was minimally affected by import and export factors.

Summary: In 2025, both supply and demand in the domestic ethanol market were weak, with prices continuing to fluctuate within a range. On the cost side, raw material prices provided some support to the market; however, the continued loose supply situation, coupled with overall weak downstream demand, meanst the market lacked a core upward driving force. Prices fluctuated within a range throughout the year, without any significant upward trend.

Looking ahead to 2026:

The support from the cost side is expected to weaken. As the Spring Festival approaching, grassroots farmers and traders, constrained by the need for cash flow, are likely to engage in a concentrated sell-off of corn, leading to a significant increase in market supply. This will put downward pressure on corn prices, subsequently driving down ethanol production costs and creating a bearish impact on the market from a cost perspective.

Demand remains weak, with downstream industries largely adhering to essential procurement principles and preferring lower-priced raw materials for substitution or blending, resulting in low acceptance of high-priced ethanol. The lack of effective demand is unable to absorb the increased supply pressure.

The logistics process is subject to certain variables; adverse weather conditions such as winter snowfall may disrupt the efficiency of logistics and transportation in production areas. This would not only increase transportation costs and extend delivery times, weakening the price competitiveness of ethanol from these regions, but also potentially disrupt factory shipment schedules and exacerbate supply-demand imbalances in local markets.

Overall, due to the combined effects of factors such as increasing expectations of ample supply, weakening cost support, and continued weak demand, the ethanol market is likely to experience a downward adjustment in the coming year.

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