Rising post-holiday operating rates in the ethanol sector, driven by favorable cost dynamics and strengthened demand.

【Introduction】Throughout September, the ethanol market faced dual headwinds from high costs and weak demand. Supply in major production regions weakened, with monthly output reaching 787,400 tons, a month-on-month decline of 5.70%. Cumulative production for January–September 2026 totaled 7.7925 million tons. Following the holiday, new grain crops entered the market, combined with improved demand from the baijiu (liquor) and chemical sectors during the traditional "Golden September, Silver October" peak season. Supply is expected to continue rising, leading to volatile but generally weak trading conditions in the ethanol market.

Data Source: Chempricehub Information

(1) Sustained Supply Expansion; Short-term Pressure Post-Holiday

Table 1: Planned Ethanol Plant Maintenance for the Next Month (Unit: 10,000 tons/year capacity)

Data Source: Chempricehub Information

According to Chempricehub data, 12 units will remain shut down over the next month, involving an annual processing capacity of 2.37 million tons. In September, ethanol units with a combined annual processing capacity of 3.91 million tons were offline. With increased supply within the market and declining bio-fermentation costs, the supply side shows a stable upward trend. This is expected to exert bearish pressure on the overall ethanol market. Overall, the domestic ethanol market in October will present a stable yet slightly weak pattern.

Bio-fermentation Ethanol: Prices remained relatively stable at the post-holiday opening. On one hand, supply from Northeast China increased while downstream demand remained flat. Additionally, the concentrated listing of the new corn crop weakened cost support, and transportation rates declined after the holiday. Amidst the tug-of-war between multiple bullish and bearish factors, prices face downward pressure in the mid-to-late part of the month.

Coal-based Ethanol: An overall downward trend is anticipated. The restart of the Kaiyue unit has increased supply. Although the Hengxin unit plans to stop operations after the holiday, its impact on the overall market is limited. If bio-fermentation ethanol prices fall subsequently, their cost-effectiveness will improve further. Downstream chemical users will prioritize purchasing bio-fermentation ethanol, squeezing demand for coal-based ethanol and increasing shipping pressure on major plants. Potential positive variable: If methanol prices remain high after the holiday, northwestern enterprises may tend to increase methanol production and correspondingly reduce coal-based ethanol output. This supply contraction could provide some price support for coal-based ethanol.

(2) Partial Demand Improvement, but Insufficient Downstream Absorption Capability as a Constraint

Table 2: Monthly Ethanol Supply-Demand Balance Sheet (Unit: 10,000 tons, CNY/ton)

Data Source: Chempricehub Information. Note: ① Total Supply = Production + Imports; Total Demand = Downstream Consumption (actual consumption by downstream markets) + Exports; Supply-Demand Gap = Total Supply - Total Demand.

On the demand side, with the improvement in the chemical industry's peak season ("Golden September, Silver October"), operating rates for ethyl methyl carbonate rose. Hualu resumed production, while the Lianhong unit went offline. Mingde's acetaldehyde unit resumed production, Jineng maintained production, and other factories kept normal loads. Operating rates for ethyl acetate remained at 45%-47%. From a regional perspective, spot availability was ample across the market, particularly in northern regions, continuously suppressing prices and factory pricing strategies. In East and South China, under the execution of export orders, supply from some factories was relatively tight, with queuing phenomena observed at individual plants, keeping prices relatively firm. However, facing high prices, downstream participants remained cautious about entering the market. Combined with profit-taking sales by some holders, buying enthusiasm was dampened, resulting in limited volume growth in overall market transactions.

Demand for traditional baijiu improved, and it is expected that baijiu demand will boost in Q4, further lifting demand for fermentation ethanol. However, the overall market demand increment failed to match the supply increment, keeping market saturation at a high level.

(3) Cost Support Remains but Weakening

Corn Market Analysis:

• Supply: New grain volumes in North China continued to increase in early October. Northeast China entered the peak harvest and selling period starting mid-October, releasing supply pressure. Under expectations of a bumper crop, grassroots selling rhythm is the core variable. If continuous rain occurs in producing areas, moldy and high-moisture grains will increase, leading to premium differentiation for quality dry grain.
• Demand: On the feed side, livestock farming losses led to rigid-demand procurement only, with large-scale restocking delayed. Processing margins for corn deep-processing (ethanol, starch) remained weak; factories purchased raw materials on an as-needed basis following price declines, avoiding locking in large volumes. Due to the post-harvest ripening period of new grain, factories were cautious about purchasing high-moisture new grain.

Cassava Chip Market Analysis:

• Harvest Rhythm in Southeast Asian Main Producing Countries: In October, Thailand and Vietnam are in a transition period where old cassava harvests are ending and new ones are gradually coming online. Early rainy seasons affected fresh cassava harvesting and drying. Short-term increases in fresh cassava supply fell short of expectations, leading to higher raw material acquisition costs for processors. Strong willingness to hold prices means overseas FOB/CNF quotes are unlikely to drop sharply in the short term.

In October, the weighted average cost center for the entire ethanol industry shifted downward, with widening cost divergence. The corn route offers greater room for cost reduction, while the cassava route sees limited cost declines. Multi-feedstock integrated factories will dynamically adjust their input ratios: as corn costs fall, they will gradually increase corn inputs and reduce cassava chip ratios, optimizing the raw material structure to lower comprehensive production costs. Pure cassava ethanol enterprises face relatively rigid costs, with loss recovery slower than that of corn ethanol plants.

(4) Market Outlook

For October, the domestic ethanol market is predicted to present a stable yet slightly weak pattern.

Bio-fermentation Ethanol: Prices remained relatively stable at the post-holiday opening. On one hand, supply from Northeast China increased while downstream demand remained flat. Additionally, the concentrated listing of the new corn crop weakened cost support, and transportation rates declined after the holiday. Amidst the tug-of-war between multiple bullish and bearish factors, prices face downward pressure in the mid-to-late part of the month.

Coal-based Ethanol: An overall downward trend is anticipated. The restart of the Kaiyue unit has increased supply. Although the Hengxin unit plans to stop operations after the holiday, its impact on the overall market is limited. If bio-fermentation ethanol prices fall subsequently, their cost-effectiveness will improve further. Downstream chemical users will prioritize purchasing bio-fermentation ethanol, squeezing demand for coal-based ethanol and increasing shipping pressure on major plants. Potential positive variable: If methanol prices remain high after the holiday, northwestern enterprises may tend to increase methanol production and correspondingly reduce coal-based ethanol output. This supply contraction could provide some price support for coal-based ethanol.

The price for general-grade corn ethanol in Heilongjiang, Northeast China, is expected to be around 4,900–4,950 CNY/ton in October.