Introduction
Based on the rolling three-month ethanol supply-demand balance, the market recorded a surplus of 32,500 tons in October. In November, domestic ethanol production rose slightly while imports narrowed, leading to a month-on-month (MoM) increase of 4.61% in total supply. However, downstream consumption weakened, causing total demand to fall by 1.17% MoM. Consequently, the supply-demand surplus expanded to 80,500 tons, resulting in a rapid buildup of inventory pressure. Looking ahead to December, both supply and demand are expected to recover simultaneously; however, inventory accumulation will continue, with ending stocks rising to 169,000 tons. In January, although production is projected to decline and exports are expected to increase, limited demand support will cause the supply-demand surplus to widen further, pushing ending stocks up to 290,000 tons. Overall, short-term ethanol supply continues to release, while downstream consumption support remains weak, suggesting the market will maintain a pattern of sustained inventory accumulation and downward pressure.
In November, the domestic ethanol market remained stable initially before declining. Regarding bio-fermentation ethanol: Food-grade ethanol contract orders in the major northeastern production area were sufficient, and tight downstream pickup provided short-term price support, keeping the market generally stable. However, as existing orders gradually concluded, combined with negative factors on the cost side, downward pressure emerged for the later period. Enterprises in the Mengzhou, Henan region maintained steady operating rates, but sluggish downstream demand posed risks of price declines. The East China market trended in line with the major northeastern production area. Fuel ethanol prices have fallen to low levels; currently, factory inventory pressure is not significant, so prices remain temporarily stable. However, overall downstream demand is weak, and enterprises are maintaining normal production. If inventories continue to accumulate, there remains room for further price declines.
Regarding coal-based ethanol: The market operated weakly overall, with significant downside risks. Previously, chemical-side raw material procurement prioritized bio-fermentation ethanol, leading to a simultaneous shrinkage in demand for coal-based ethanol due to insufficient order follow-up. Inventory levels at some manufacturers rose, suppressing prices and making them prone to falling rather than rising. On the supply side, Shandong Hengxin’s unit was scheduled to restart in mid-to-late November, and new capacity was planned for commissioning. Although some units in Anhui had planned shutdowns for maintenance, the overall supply volume was still expected to increase. Intensified market competition suggests that coal-based ethanol prices will likely continue to weaken.
Monthly Ethanol Supply-Demand Balance Table – Rolling Three Months (Unit: 10,000 tons)
| Item | Oct | Nov E | MoM Change | Dec E | Jan E |
|---|---|---|---|---|---|
| Opening Inventory | 1.01 | 3.25 | 221.78% | 8.05 | 16.90 |
| -- Production | 82.28 | 84.00 | 2.09% | 85.00 | 80.00 |
| -- Imports | 0.40 | 0.30 | -25.00% | 0.30 | 0.20 |
| Total Supply | 83.69 | 87.55 | 4.61% | 93.35 | 97.10 |
| -- Downstream Consumption | 76.20 | 75.00 | -1.57% | 80.00 | 80.00 |
| -- Exports | 4.24 | 4.50 | 6.13% | 4.50 | 5.00 |
| Total Demand | 80.44 | 79.50 | -1.17% | 84.50 | 85.00 |
| Supply-Demand Gap | 3.25 | 8.05 | 147.69% | 8.85 | 12.10 |
| Ending Inventory | 3.25 | 8.05 | 147.69% | 16.90 | 29.00 |
The supply-demand gap remained positive throughout October, decreasing compared to the previous month. The primary reason was the conclusion of concentrated maintenance shutdowns for on-site units and increased supply from other regions, while downstream demand improved, resulting in a relatively balanced supply-demand situation within the market.
Ethanol Market Sentiment Survey (%; Inner Circle: November, Outer Circle: October)
(Note: Data Source: Chempricehub Information)
As of October 28, 2026, a sentiment survey of domestic ethanol market participants regarding their outlook for November yielded the following results: 50% bearish, 30% stable, and 20% bullish. Bullish sentiment is based on the view that high factory order volumes will support price increases. Stable sentiment reflects ongoing order execution, though prices have risen to high levels with limited transactions for new downstream orders. Bearish sentiment cites negative cost-side factors, declining demand, and falling coal-based ethanol prices, which may shift some orders toward coal-based ethanol.
For November, the domestic ethanol market is predicted to present a stable yet weakening pattern. Regarding bio-fermentation ethanol: With the launch of new grain harvests, on-site operating loads are continuously rising, leading to increasing supply. Coal-based ethanol unit operating loads are expected to stabilize and consolidate. Short-term ethanol market supply will be ample. On the demand side, influenced by international geopolitical conflicts, exports of certain downstream products have peaked, driving overall operating loads higher. Traditional chemical and baijiu (liquor) demand is improving. Amidst this supply-demand tug-of-war, overall market prices are expected to maintain a trend of stability with underlying weakness. For example, the price of standard corn-based ethanol in Heilongjiang, Northeast China, is projected to range between 5,000 and 5,100 RMB/ton in November.
Future Three-Month Forecast: From November to January, domestic ethanol prices are expected to trend narrowly downward. Fermentation ethanol supply will increase, costs will decrease, and no significant boost is seen on the demand side. Purchases will primarily consist of rigid demand. Traditional baijiu demand remains stable, creating a mismatch between supply and demand within the market. Prices are unlikely to improve in the short term and are expected to fluctuate downward. Pricing power will remain concentrated in the bio-fermentation sector.
Key Points to Watch Next Period:
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