Marginal changes in ethanol supply lead to short-term price stabilization.

Introduction: The domestic ethanol market is currently characterized by a slight contraction in supply, limited cost support, and divergent demand trends. Weekly capacity utilization stood at 49.55%, down 1.00 percentage point from the previous period, indicating weakened supply from some fermentation ethanol units. On the raw material front, corn prices faced downward pressure, reducing cost support. In downstream sectors, ethyl acetate prices rose before falling with a notable net increase, while methyl ethyl carbonate (MEC) operating rates continued to decline. Considering overall supply-demand dynamics and pre-holiday stocking rhythms, ethanol prices are expected to remain stable in the next period.

Regional Ethanol Operating Rate Changes

Data Source: Chempricehub Information

Domestic ethanol operating loads typically fluctuate cyclically due to unit maintenance, raw material supply, and market demand. This week, the overall domestic ethanol capacity utilization rate was 49.55%, a quarter-on-quarter decrease of 1.00 percentage points, reflecting a slight retreat in overall supply levels. Regional performance showed significant divergence. Data indicates that East China experienced the most pronounced drop in operating rates, declining by 5.65 percentage points QoQ. Conversely, the Northwest region saw an upward trend against the general direction, rising by 6.41%. Operating rates in Northeast, North China, South China, Central China, and Southwest regions remained largely stable.

This divergent supply landscape is primarily driven by enterprise unit maintenance. Total industry maintenance capacity reached 2.3 million tons this period, with both fermentation and coal-based ethanol units undergoing shutdowns. Major units at Heilongjiang Shenglong, Guangxi COFCO, Shandong Hengxin, and Yulin Kaiyue were under maintenance, with some enterprises in a standby phase awaiting restart. Consequently, overall production of coal-based ethanol declined, while bio-fermentation ethanol output saw minor fluctuations. Some enterprises have resumed feeding materials but have not yet produced commercial goods, further impacting the release of marketable quantities.

(Note: Chart data for Ethyl Acetate and MEC price trends omitted as per image-only content instruction)

On the demand side, downstream industries showed mixed activity levels. This week, ethyl acetate capacity utilization was 49.62%, up 5.17 percentage points QoQ. In contrast, the operating rate for methyl ethyl carbonate (MEC), used as a lithium battery solvent, dropped to just 31%, down 4.5 percentage points QoQ. Multiple units within the sector reduced loads or stopped operations, with the market relying mainly on long-term contract deliveries, resulting in low spot circulation volumes.

The ethyl acetate market prices rose initially before falling back, averaging CNY 7,042/ton for the week, a QoQ increase of 4.17%. Early in the week, trading was active due to rising acetic acid raw material costs and post-holiday restocking by downstream users. However, later in the week, raw material prices retreated, downstream follow-through weakened, and ample supply led to increased discounting offers as sellers' confidence diminished. For MEC, small volumes traded at high prices, and the market expects operating rates to maintain narrow-range fluctuations in the next cycle. Traditional consumption sectors such as baijiu (Chinese liquor) are approaching the holiday season, with stocking demands gradually starting, which will provide some support to ethanol demand.

Regarding raw material costs, the arrival of new harvest crops has altered the industry's cost environment. This week, the national average weekly price for corn was CNY 2,194/ton, down CNY 41/ton (-1.83%) QoQ. Concentrated listings of new corn in Northeast China led to cautious purchasing by deep-processing enterprises, who continuously pushed for lower acquisition prices. In North China, the listing of new crops entered its mid-to-late stage, with arrivals peaking and then receding, causing acquisition prices to adjust amid volatility. After consecutive price drops, farmers' reluctance to sell increased, limiting further downside potential for corn prices. On the import front, Thai dried cassava chips remained stable at USD 245/ton FOB. As core raw materials for fermentation ethanol, the price trends of corn and cassava directly determine the profitability of fermentation ethanol producers. The downward pressure on raw material costs from new crop listings has somewhat alleviated cost pressures on production enterprises.

Synthesizing supply-demand and cost changes, the ethanol market is expected to remain stable in the near term. On the supply side, some coal-based ethanol units under maintenance, such as those at Yulin Kaiyue and Shandong Hengxin, plan to restart, potentially releasing more supply from the Northwest region. On the demand side, pre-holiday stocking in the baijiu industry is gradually unfolding, and rigid demand from chemical downstream sectors remains, though overall explosive growth is limited. Although cost support from raw materials is stabilizing, logistics freight rates have risen slightly. Factories tend to keep ex-factory prices stable, which may lead to higher delivered prices in consumer regions.

Key variables to monitor include:

1. The progress of coal-based ethanol unit restarts and inventory changes among Northwest enterprises.
2. Inventory levels of fermentation ethanol producers in Northeast production areas and fluctuations in transport capacity and freight costs.
3. The actual scale of pre-holiday stocking by downstream industries.
4. Corn price trends following new crop listings, which will continue to influence ethanol costs.

Overall, the short-term ethanol market lacks momentum for unilateral sharp rises or falls; amidst supply-demand maneuvering, the market trend is expected to maintain oscillatory consolidation.