Ethanol prices remain stable with a slight upward trend, as declining feedstock costs drive profit margin recovery.

【Introduction】The domestic ethanol market exhibits regional divergence, improved costs, and a slight weakening of supply-demand dynamics. The launch of new corn crops in Northeast China has driven down raw material costs, causing local corn-based ethanol prices to rise against the trend and significantly restoring corporate profitability; meanwhile, cassava-based ethanol remains loss-making due to high feedstock costs. On the supply side, overall output contracted due to maintenance and reduced loads at multiple plants, while coal-to-ethanol capacity has not yet been fully released. Downstream markets show mixed performance: chemical-grade demand supported by essential restocking pushed delivered prices higher, whereas the fuel ethanol sector faced downward pressure. In the short term, pre-holiday stockpiling provides support, but subsequent restarts of coal-to-ethanol units will add supply, limiting significant upside potential. The market is expected to remain largely range-bound.

Raw material costs have eased notably. The national weekly average price for corn stood at 2,194 RMB/ton, down 41 RMB/ton from the previous week, a decline of 1.83%. As new corn crops from Northeast China gradually come to market, deep-processing companies facing profit pressure have adopted cautious procurement strategies, continuously lowering purchase prices. In North China, the new crop harvest is entering its mid-to-late stage; arrivals surged before declining, leading to a small rebound followed by a pressured correction in purchase prices. After consecutive price drops, farmers' reluctance to sell has increased, limiting further downside space. Thai dried cassava chip quotes remained stable at FOB USD 245/ton, with minor fluctuations in the RMB exchange rate. Molasses ex-factory prices in Guangxi rose to 750–800 RMB/ton; molasses-based ethanol production remains profitable, prompting some enterprises to resume operations.

Domestic Ethanol Supply-Demand Balance Sheet (Unit: 10,000 tons)

Cost reductions directly drove improvements in profitability. This week, the theoretical cost of Northeast corn-based ethanol fell to 4,869 RMB/ton, a decrease of 3.96% compared to the previous period, turning losses into profits of 222.58 RMB/ton. Profit margins for Northeast fuel ethanol reached 407.85 RMB/ton, an increase of 168.63 RMB/ton week-on-week. In contrast, Northern Jiangsu cassava-based ethanol faces rigid constraints from raw material costs, with margins remaining at -279.51 RMB/ton, continuing to operate at a loss. By process route, the divergent pattern of "corn route recovery vs. cassava route pressure" is unlikely to change in the short term.

Domestic Ethanol Profitability Table (Unit: RMB/ton)

Supply contracted slightly. During this period, on-site bio-fermentation ethanol supply remained stable, while coal-to-ethanol production declined. A Shandong plant halted operations, and the Yulin Kaiyue unit had ignited but produced no product yet. Industry weekly capacity utilization dropped to 49.55%, down 1.00 percentage points from the previous period. Notably, Northwest China saw a 6.41 percentage point increase, while East China experienced a 5.65 percentage point decrease. Maintenance activities covered a total capacity of 2.3 million tons, with units such as Heilongjiang Shenglong and Shandong Hengxin shutting down during the period. On the demand side, ethyl acetate operating rates rose significantly by 5.17 percentage points, supported by Henan Ruibai's production and post-holiday restocking by downstream users. However, diethyl carbonate capacity utilization fell to 31% due to shutdowns and reduced loads. Overall, supply remained less than demand, with a weekly theoretical balance gap of 0.64 ten-thousand tons. For the next period, this gap is expected to turn negative, though the absolute magnitude is projected to narrow.

Downstream divergence persists. Fuel ethanol prices remained weak. Although inventory levels at various Northeast plants were not high, sellers showed proactive shipping sentiment. Delivered prices in Heilongjiang dropped to 5,800–6,087 RMB/ton, while gate-in prices at Shandong independent refineries fell by 70 RMB/ton to 5,950 RMB/ton. Conversely, the chemical sector showed strength. Ethyl acetate prices rose early in the week driven by raw material increases and post-holiday restocking, before negotiation momentum weakened. The East China weekly average price was 7,042 RMB/ton, up 4.17% week-on-week. Essential chemical demand boosted delivered prices, while declining refinery demand exerted downward pressure on certain segments.

Looking ahead, ethanol prices are expected to stabilize. Pre-holiday stockpiling is gradually starting, providing support through improving chemical demand and increased baijiu (liquor) consumption. However, rising freight rates and anticipated supply additions (restarts of some coal-to-ethanol units and resumption at Xinjiang Tianye) pose headwinds. Factories may offer logistics discounts to maintain shipment volumes. Key focus areas include changes in coal-to-ethanol operating rates, inventory levels at major Northwest plants, Northeast fermentation ethanol stocks, and freight rate trends.