Supply long-term capacity growth, short-term production decline

With the announcement of a new round of downtime and maintenance plans, production may continue to decline in June and July, because the decline in ethanol prices has little effect on stimulating shipments, and ethanol producers are strongly willing to return to the cost side. There are still two sets of coal-to-ethanol production capacity of 1.1 million tons under construction, and in the second half of the year, there are other process industry ethanol plants are also planned to put into production, the future of China’s synthetic ethanol production capacity will usher in new growth. The reason for the expansion is that the price of corn in China continues to maintain a high trend, the production cost of corn fermentation is high, and the production cost of coal to ethanol is relatively advantageous.

Terminal transmission from the bottom up, weak demand drag down the market mentality

The overall performance of food and beverage, chemical and pharmaceutical fields is weak, and the downstream products of the more terminal are more in a state of destocking, and the period of continuous inventory construction of large-scale raw materials has not yet entered. In addition, some downstream products have poor profits, there are no downstream enterprises plan to increase the load in June to July, and most downstream production enterprises still produce according to orders, the device starts and stops repeatedly, only according to the need to buy goods, the enthusiasm for ethanol procurement is not good, and the confidence in the future market is not greatly boosted.

The cost support is strong, and the cost advantage of coal ethanol is prominent

Affected by factors such as poor profits of downstream products and wheat substitution, corn prices have been in a volatile downward stage recently, but they are still at a high level in recent years. The price of dried cassava in Thailand fluctuates slowly, and the impact of negative exchange rate imports and other factors increases the production cost of enterprises. Affected by the game of supply and demand, domestic ethanol prices are weak and enterprises are not willing to start work, and just need to purchase. Molasses prices continue to rise, supported by a decrease in molasses supply and an increase in yeast factory demand, high molasses prices, and short supply. The cost pressure of coal-based ethanol is relatively small, which intensifies the competition in the ethanol industry.