Ethanol Prices have Fallen to a Freezing Point in Recent Years

Recently, the market has fallen, and the price of edible ethanol has fallen to the lowest point in nearly 2 years (taking the Northeast as an example). The continuous decline in the market is full of lamentation, and downstream and traders are afraid of continuing to fall under the influence of sporadic purchases. As of press time, the price of Heilongjiang general grade ethanol is 5700-5900 yuan/ton, the price of Jilin general grade ethanol is 5950-6050 yuan/ton, the price of Henan premium grade ethanol is 6150 yuan/ton, and the price of cassava ethanol in northern Jiangsu is 6400 yuan/ton. The price of fuel ethanol in Northeast China is 6200-6300 yuan/ton. The reasons for the continued weakening of prices: the Northeast edible start is normal, the supply is sufficient, the cost is negative, the downstream demand is average, the procurement mentality is not positive, and the market is affected by the negative mentality.

Will the ethanol and fuel ethanol market continue to decline in the short term? Let's take a look at the specific situation of the market with questions.

Although the state reserve has received core news recently, it has not boosted domestic corn prices, and some shipments have a positive mentality, while downstream traders and terminals are not willing to build warehouses, and some areas have replenished imported goods, and regional corn prices have weakened slightly.

From the cost side: although the price of corn in the Northeast continues to weaken, enterprises have more corn consumption in the early stage, and there are also corn that has been supplemented with price reductions, and the demand for by-product DDGS is light and the supply is sufficient, the inventory has risen, and the price has fallen to a low level. The production of enterprises is basically already in the cost line or has lost money. Support continues to weaken and is insufficient. In terms of cassava ethanol in East China, the price of dried cassava in Thailand continues to weaken with the increase in quantity and the price of light procurement in the Chinese market, and the current price accounting is slightly profitable, but if the ethanol market continues to weaken, the production of enterprises is still unprofitable or loss-making.

From the perspective of supply: the large corn ethanol factories in Northeast China have maintained that the output of edible ethanol is greater than that of fuel ethanol (there has been no adjustment as of press time), and other small factories have maintained normal production and have maintained orders and shipments, and the inventory of large factories is not high, which is a normal level. Corn ethanol production enterprises in Mengzhou, Henan Province maintained full production, but in the short term, due to the impact of snowfall on the delivery speed, the involution between enterprises intensified. The rigid demand for the purchase of liquor has led to the fact that the inventory of the enterprise will not expand to the warehouse to reduce production, and the current price has dropped to a low level, and the cross-regional arbitrage of chemical consumption has been opened, which does not rule out the possibility of chemical demand procurement, so that the inventory has declined. Judging from the experience of previous years, enterprises in Mengzhou have downtime during the Spring Festival. In the short term, cassava ethanol in East China basically remains low, and the continued downturn in the ethanol market has led some companies to wait for the raw materials after the Spring Festival and have no plans to start up for the time being. Anhui Dachang has no plan to produce general-grade ethanol this year, and a small amount of inventory is consumed.

On the demand side: Ethyl acetate that has reduced production or shut down has basically recovered this month, but during the Spring Festival, ethyl acetate plants have shutdown plans except for some large factories that have no shutdown plans, and ethanol consumption has declined. In terms of liquor, it is just necessary to stock up before the holiday. Under the influence of the market's fear of falling mentality, some purchases are cautious.

In terms of fuel ethanol: the main pre-holiday stocking was basically completed, and orders from Northeast enterprises were shipped. Downstream refineries have not seen centralized stocking, and the recent transaction price has weakened, mainly due to the expiration of some contracts in the market or the dumping of goods by some enterprises. In the short term, refinery transaction prices are likely to continue to weaken. Fermentation fuel ethanol prices are likely to remain firm in the short term due to order support.

In terms of freight rates: the possibility of a slight increase in the short term due to the pre-holiday stocking situation.