The Ethanol Market Was Fluctuating Weakly

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According to the Commodity Market Analysis System of SunSirs, the domestic price of ethanol has fallen to 5,639 RMB/ton; within the reporting period, the price declined by 0.18% (down 2.87% month-on-month but up 3.27% year-on-year). The ethanol industry continues to experience a tug-of-war between supply and demand as the maintenance season coincides with the off-season for demand. While ethanol plants in some regions have entered their maintenance periods—leading to a temporary drop in supply that helps alleviate current inventory pressure—downstream demand has simultaneously entered a slack period, with planned shutdowns for related facilities; notably, demand from the baijiu (Chinese liquor) sector remains weak. In the short term, ethanol price trends are expected to vary slightly across different regions.

Market Analysis

Regarding costs, corn prices face significant downward pressure. On one hand, wheat has have become a primary substitute in animal life feed due to its price and nutritional advantages, while aged rice stocks offer a low-cost alternative; on the other hand, imported corn and barley serve as supplementary supplies, collectively encroaching on the market share to corn in the feed sector. Consequently, corn demand is unlikely to see a significant rebound in the short term, and the market is expected to remain generally weak. Cost factors to ethanol are also exerting a bearish affect.

On the supply side, the overall situation of oversupply in the ethanol sector is unlikely to see fundamental improvement in the short term. Factors such as vegetation entering the maintenance season and successive unit shutdowns are providing bullish support, and ethanol prices in the Northeast region are expected to remain stable in the near term. However, the supply-side outlook is also influenced by bearish factors.

On the demand side, regarding downstream sectors: the restart of Yankuang’s ethyl acetate unit failed, and the Zhuhai Qianxin unit has shut down; other chemical sectors are making only essential, need-based purchases. Demand to baijiu has declined. Overall downstream demand is sluggish. Ethanol demand is facing bearish factors.

Market Outlook

The Northeast region has entered a maintenance period, and end-user demand continues to decline; off-season demand remains a factor weighing on ethanol transaction prices. Analysts at SunSirs predict that the ethanol market direction might continue to slide.

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