Ethanol Market Analysis Report

Market Overview
The mainstream ethanol market showed an upward trend in March, primarily driven by rising production costs and a reduction in supply. The overall demand gradually recovered post-holiday, with improvements in both chemical and end-user consumption.

Price Performance (Unit: CNY/ton)

| Market Segment | Product/Grade | Region/Raw Material | Previous Period | Current Period | Change Rate | Analysis |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Mainstream Market | Regular Grade (95%) | Heilongjiang Corn-based | 5190 | 5492 | +5.81% | Prices rose due to sustained cost increases and reduced on-site supply. |
| | | Northern Jiangsu Cassava-based | 5675 | 5900 | +3.96% | Prices increased driven by rising costs and improved demand from the surrounding chemical industry. |
| | Anhydrous (99%) | Jilin Corn-based | 5865 | 6075 | +3.58% | Prices rose due to sustained cost increases and reduced on-site supply. |
| | | Northern Jiangsu Cassava-based | 6225 | 6450 | +3.61% | Prices increased driven by rising costs and improved demand from the surrounding chemical industry. |
| | Fuel Ethanol | Heilongjiang | 5917 | 6040 | +2.08% | Prices trended upward supported by fuel policies and demand from major operators. |
| | Coal-based Ethanol | Henan | 5762 | 6100 | +5.87% | Prices adjusted upward during the period, following the trend of fermented ethanol prices. |

Cost & Gross Margin Analysis

| Category | Item | Region/Raw Material | Previous Period | Current Period | Change Rate | Analysis |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Cost | Production Cost | Heilongjiang Regular Corn-based | 5364 | 5421 | +1.06% | Corn prices continued a slight upward trend post-holiday with improved transaction activity. Cassava chip prices climbed to high levels post-holiday, further deepening cost support. |
| | | Northern Jiangsu Regular Grade | 5997 | 6102 | +1.75% | |
| Profit | Gross Margin | Heilongjiang Regular Corn-based | -69.75 | 49.21 | +170.55% | Supply in major production areas stabilized, with output not reaching high levels. Demand gradually recovered, and improved chemical/end-user demand pushed transaction prices up. However, sustained strong cost support limited the upside for ethanol prices, resulting in limited profit margin fluctuations. |
| | | Northern Jiangsu Regular Grade | -319.37 | -275.85 | +13.63% | |
| | | Henan Coal-based | 250 | 300 | +20.00% | |

Supply & Demand Fundamentals

| Category | Metric | Previous Period | Current Period | Change Rate | Analysis |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Supply | Output (10k tons) | 41.69 | 41.69 | 0.00% | Output remained stable during the period: Supply in Northeast, East China, and Henan regions has not recovered, while coal-based ethanol supply remained stable. |
| | Capacity Utilization Rate | 59.03% | 59.03% | 0.00% | |
| | Imports (10k tons) | 0.00 | 0.00 | 0.00% | |
| Demand | Exports (10k tons) | 0.01 | 0.01 | 0.00% | Demand is gradually recovering, primarily boosted by post-holiday demand from chemical and end-user sectors. |
| | Downstream Consumption (10k tons) | 45.20 | 45.20 | 0.00% | |
| | Total Demand (10k tons) | 45.21 | 45.21 | 0.00% | |

Key Market Drivers Analysis

a) Cost (Raw Materials):

• Corn: Corn prices rose overall in March but showed weakness towards month-end. The national average price was CNY 2,406/ton, up CNY 70/ton MoM (+3.00%). Prices in Northeast China rose first then weakened, but were significantly higher than February. Early-month futures gains boosted spot sentiment. Deep processing plants raised purchase prices, supporting demand. Late-month negative factors like increased wheat auctions and rumors of overdue rice auctions led to slight price weakness. Prices in North China rose then stabilized with notable gains. Early-month supply was tight due to holidays, weather, and low sales from farmers. Downstream companies with low inventories were willing to restock, raising prices. Later, trader willingness to sell increased, supply rose, and downstream plants lowered purchase prices. Prices in consumption areas were strong then weak, influenced by high futures and origin costs. Feed mills had sufficient inventories and some used wheat substitution, leading to muted overall transactions. Prices fell late-month following futures and origin price declines.

b) Regional Supply:

• Bio-fermented Ethanol: Major plants in Northeast China operated at low rates. In East China, only Jiangsu Huating operated at low rates for cassava-based ethanol; Anhui Wanshen resumed after a brief shutdown for raw material change. Operations in Guangxi were stable, with Jinyuan's unit resuming. Operations in Henan saw a slight recovery.
• Coal-based Ethanol: Operations were generally stable. Xinjiang Tianye's operating rate decreased around month-end, and Yushen slightly reduced output.
• Plant Operations:
  • Northeast China (Bio-fermented/Fuel): Heilongjiang Hongzhan and Wanli operated at low rates; Guotou Jidong, Guotai Hailun, and Tieling units were stable. Jilin Fuel Ethanol operated normally; Jilin Fukang (Lines 3 & 4) and Jilin Xintianlong operated normally; other plants maintained normal operations.
  • Henan (Mengzhou area): Houyuan and Huaxing operated normally; Hanyong resumed after a brief shutdown.
  • Guangxi: Operations increased. COFCO Guangxi operated at sub-optimal rates; Guangxi Jinyuan resumed. Low molasses prices improved production margins for ethanol plants, supporting stable operations for molasses-based ethanol.
• Raw Material Status: Corn prices in the Northeast rose then stabilized, while prices in other regions retreated. Farmers were reluctant to sell at low prices, limiting low-cost corn availability. Factories mostly consumed previously purchased high-cost corn. Thai cassava chip supply was limited, with FOB offers rising. East China cassava ethanol plants made sporadic purchases.
• Profitability: Corn-based ethanol hovered around the break-even point. Molasses-based ethanol was profitable. Cassava-based ethanol remained loss-making.

c) Cassava-based Ethanol:
The average FOB price for Thai cassava chips during the period was $243.75/ton, up $16.96/ton MoM. The ethanol production ratio is 1:3. While ethanol prices rose overall during the month, the increase was less than that of cassava chips, leading to expanded production losses.

d) Inventory:
Domestic spot ethanol inventory totaled approximately 59,100 tons in March, showing a slight increase. The increase was mainly concentrated in fuel ethanol inventory. Current edible-grade inventories at Northeast and East China ports are not high. Some coal-based ethanol plants hold inventory, while others have low stock levels.

e) Demand:
Total ethanol consumption saw a slight MoM boost in March. Data indicates domestic ethanol consumption reached 871,400 tons, a 3.27% increase from the previous period.

Coal-based Ethanol Market (Unit: CNY/ton)

| Market | Category | Mar 1-15 | Mar 16-31 | Change |
| :--- | :--- | :--- | :--- | :--- |
| Shaanxi | Coal-based Ethanol | 5350 | 5750 | +7.48% |
| Anhui | Coal-based Ethanol | 5651 | 5900 | +4.41% |
| Henan | Coal-based Ethanol | 5762 | 6100 | +5.87% |

Data Source: chempricehub

Coal-based ethanol prices rose in March. On the supply side, output was stable earlier in the month but decreased around month-end. Key operational details: Henan Liyuan, Baling Petrochemical, and Henan Ruibai operated normally. Xinjiang Tianye operated one production line, with output dropping to around 200 tons/day in late March. Yushen Nenghua gradually reduced output. Shandong Hengxin operated at 70% capacity. Kaiyue, Jingmen Yuanhan, and Huizhou Yuxin operated normally. As of this report, offers from Shandong factories were around CNY 6,300/ton (up CNY 550/ton MoM); Shaanxi factory offers were CNY 5,760/ton (up CNY 630/ton MoM); Anhui factory offers were CNY 6,090/ton (up CNY 560/ton MoM). Supply of coal-based ethanol decreased this month. Downstream chemical plants made routine purchases. As bio-fermented ethanol prices rose to high levels, the delivered price of coal-based ethanol remained competitive, leading to increased consumption by downstream plants.

Coal-based Ethanol Supply-Demand Balance Table

| Data Type | Metric | Current Period | Previous Period | Change | Next Period Trend |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Supply | Fermented Ethanol Output (10k tons) | 31.37 | 31.37 | 0.00 | → (Stable) |
| | Coal-based Ethanol Output (10k tons) | 10.32 | 10.32 | 0.00 | → (Stable) |
| | Total Supply (10k tons) | 41.69 | 41.69 | 0.00 | → (Stable) |
| Demand | Chemical Consumption (10k tons) | 30.50 | 30.50 | 0.00 | → (Stable) |
| | Gasoline Blending Consumption (10k tons) | 13.80 | 13.80 | 0.00 | → (Stable) |
| | Total Demand (10k tons) | 44.30 | 44.30 | 0.00 | → (Stable) |
| Balance | Weekly Theoretical Balance (Supply-Demand) | -2.61 | -2.61 | 0.00 | Shifted to negative, with a decrease in absolute value. |

Supply-Side Changes: Supply remained stable during the period, with operating rates running steadily.

Detailed Changes:

1. Edible Ethanol: National operating rates increased slightly MoM. Bio-fermented ethanol operating rates rose, while coal-based ethanol rates were stable. (Details as per section b above).
2. Fuel Ethanol: (Details as per section b above).
3. Coal-based Ethanol: Operations were stable overall. (Details as per section b and the coal-based ethanol section above). Supply was stable earlier in the month but decreased around month-end.