China’s domestic ethanol market was relatively stable in August

Price Trend

In August 2019, the ethanol market was relatively stable. The monitoring by business associations showed that the price of ethanol at the end of the month was 5380 yuan/ton, which was 3.26% lower than that of the same period last year.

II. Analysis of Influencing Factors

Products: In July, the domestic ethanol market performance was relatively stable. Enterprises in Northeast China were actively releasing goods. Market transaction prices were basically near the cost line. At the beginning of the month, centralized purchasing was carried out in the lower reaches. It was felt that after centralized purchasing in the lower reaches, the market price should be raised. However, the market performance was not as expected, and the market did not rise against expectation. The decline is mainly due to the fact that the inventory of enterprises has not reached a low level. Some enterprises’shipment mentality has actively led to the bursting of low-price goods in the market, the poor delivery of high-end goods, the continuing decline of low-end market prices. In mid-July, Northeast China entered the overhaul season, and large factories entered the overhaul successively. Driven by the good overhaul, the market has not risen. After the end of this month, some enterprises started their installations, which were supported by a small increase in the market due to the large number of contracts and orders from individual enterprises and the low inventory. As for raw materials, the price of maize has been weakly adjusted, due to the poor delivery of ethanol plant shutdown and downstream feed industry, the last auction time for maize storage is expected in early August.

Industry chain: raw materials, corn: this month, the domestic northeastern corn alcohol enterprises profit margin is still acceptable, first corn prices have a narrow fluctuation downward, followed by DDGS prices higher, to fill the profit margin. According to the profitability of corn alcohol in Heilongjiang, the current purchase price of corn is around 1600-1730 yuan/ton, and the current price of DDGS is 1730-1900 yuan/ton. Looking at alcohol, the price mainstream is around 4650-4750 yuan per ton, and theoretical profit of 310 yuan per ton of alcohol.

Ethyl acetate: The domestic market of ethyl acetate has risen sharply this month, with the increase of 550 yuan/ton in East China and 850 yuan/ton in South China. At the beginning of the month, we encountered the downstream phased replenishment, as well as the partial cargo digestion in the North China market, and the low inventory of the mainstream enterprises, which led to the continuous increase in the turnover of the offer. Subsequently, raw material acetic acid rose sharply, and on the basis of low social inventory of ethyl acetate, suppliers pushed up the offer, following the rising trend of raw materials. After mid-month, part of the export shipments were delivered one after another, and the overall social stock of the market remained low. Under the situation that downstream ethyl acetate remained bullish for the latter period, purchasing and reserving goods was positive, and the market parties had obvious advantages.

Industry: According to the price monitoring of business associations, in August 2019, there were 37 commodities rising annually in the chemical sector, of which 15 commodities increased by more than 5%, accounting for 17.9% of the monitored commodities in the sector; the first three commodities were hydrogen peroxide (39.93%), acetic acid (20.90%) and butadiene (14.47%). There are 39 kinds of products with a decline of more than 5%, accounting for 15.5% of the monitored products in this sector. The products with the first three declines are yellow phosphorus (-27.58%), epichlorohydrin (-23.28%) and sulfur (-19.38%). This month’s average rise and fall was 0.03%.

3. Future Market Forecast

Looking at the market next month, “Gold September Silver October” chemical peak season is coming, but combined with the market at the end of August, it is difficult to make a significant improvement before mid-September. At present, the domestic alcohol supply is large, the Mid-Autumn reserve of downstream liquor has not promoted the market to rise, but in chemical industry, only ethyl ester has started well, and other chemical downstream maintained just need to purchase the amount. According to the rules of the industry, the Mid-Autumn Festival stock-up cycle has ended. September will be faced with the “Eleventh” holiday stock-up, coupled with the production of downstream chemical industry, or a certain degree of favorable alcohol market. However, considering the new grain market in September, the trend of cost will directly guide the market, which needs to be followed up.