SunSirs: The Ethanol Market Was Showing a Weaker Trend

Price trends

According to the commodity market analysis system of SunSirs, the domestic price of ethanol has fallen to 5,619 RMB/ton. Over the past three months, the price has declined by 4.84%, with month-on-month and year-on-year decreases of 0.34% and 0.81%, respectively. Costs have stabilized, and fluctuations in supply and demand remain limited, resulting in steady trading activity. Regarding supply, while there have been some operational fluctuations at major production facilities, the volume of production loss has been minimal. On the demand side, the end-consumer market remains under pressure with a sluggish recovery, and downstream buyers are largely adopting a wait-and-see approach.

Market Analysis

Regarding costs, corn prices in Northeast China remain stable with a slight downward bias, and trading activity has yet to improve. In North China, prices are fluctuating within a narrow range, showing localized divergence. Traders generally hold high inventory levels; recently, rainy weather has dampened corn trading in some areas, and the distribution of grain supplies is uneven. Market prices in consuming regions are trending slightly lower. Cost-side factors are exerting downward pressure on ethanol prices.

Regarding the supply side, the overall situation of oversupply in the ethanol industry is unlikely to see fundamental improvement in the short term. The capacity utilization rate remains at 46.43%, and overall supply has decreased—specifically, the supply of bio-fermented ethanol has dropped due to shutdowns at Heilongjiang Shenglong and Henan Hanyong. In Jilin, Fukang is operating production lines 3 and 4 while line 2 is shut down; Jilin Xintianlong is in production; and the Dongfeng Hualiang facility is shut down. These factors are exerting a bullish influence on the ethanol supply outlook.

Regarding the demand side and downstream sectors: In terms of demand timing, the Mid-Autumn Festival and National Day holidays overlap this year, with the pre-holiday stocking period expected to begin in early September. At that time, downstream sectors—such as baijiu production, the chemical industry, and gasoline blending—will enter a phase of concentrated restocking, which is likely to provide a short-term boost to the ethanol market. Overall, demand-side factors are favorable for ethanol.

Market Outlook

With maintenance periods in major production regions concluding and end-user demand improving—despite the fact that traditional demand remains in the off-season—the domestic ethanol market continues to face an oversupply situation. Analysts at SunSirs anticipate that the market will primarily undergo a period of consolidation.

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