SunSirs: The Ethanol Market Was Undergoing a Consolidation and Tended to Be weaker

Price Trends

According to the commodity market analysis system of SunSirs, following the holiday period, domestic ethanol prices declined to 5,815 RMB/ton. Over the reporting cycle, prices fell by 0.32%; on a month-on-month basis, they dropped by 1.53%, while year-on-year, they rose by 9.84%. The domestic ethanol market generally exhibited a weak trend, as a confluence of bearish factors weighed on the sector, driving prices into a gradual downward spiral. On one hand, demand from the *Baijiu* (Chinese liquor) industry has softened, resulting in reduced procurement volumes for ethanol. On the other hand, the price of corn—a core raw material for ethanol production—has declined, thereby further eroding the cost-side support for ethanol production. Consequently, small-scale producers were the first to lower their quoted prices, a move that subsequently triggered a volatile downward trend across the broader ethanol market.

Market analysis

Regarding the cost landscape—specifically from the input cost perspective—corn prices in Northeast China remained largely stable throughout the May Day holiday. Overall market trading activity was subdued, and no significant price adjustments were observed. However, in the post-holiday period, market sentiment faced some bearish pressure amid rumors regarding the auction of expired rice stocks. Consequently, futures prices weakened, prompting a slight downward adjustment in procurement prices at northern ports compared to pre-holiday levels. Overall, cost-side factors for ethanol production showed bearish influence.

From the perspective of supply—given that prices remained at elevated levels and market shipments are sluggish—factory inventories continue to rise; consequently, enterprises are lowering their quoted prices in an effort to destock. The supply side of the ethanol market showed the influence of bearish factors.

Regarding the demand side—specifically the downstream sector—the market is expected to maintain a purchasing rhythm driven primarily by essential needs. Notably, ethyl acetate manufacturers may schedule maintenance shutdowns in May; this factor, coupled with a decline in export volumes, is expected to dampen their demand for ethanol. Meanwhile, demand from the *Baijiu* (Chinese liquor) industry is trending downward as temperatures rise, resulting in a reduction in ethanol consumption. Consequently, the demand side for ethanol showed bearish influences.

Market outlook

Major bio-fermentation ethanol plants in China's Northeast region are planning to undertake maintenance work, which will directly lead to a decline in regional supply. Concurrently, as corn serves as the primary raw material for production, its price is expected to rise slightly; coupled with the fact that ethanol plants are set to continue operating at low utilization rates, these multiple factors collectively support price stability. According to analysts at SunSirs, the ethanol market is expected to remain primarily in a consolidation phase.

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