I. Supply and Demand Both Decline, Deepening Bearish Market Factors

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

| Indicator | April | May | Change | Change % | June E | Est. Change % |
|-----------|-------|-----|--------|----------|--------|---------------|
| Production | 97.34 | 90.66 | -6.68 | -6.86% | 88.50 | -2.38% |
| Imports | 0.00 | 0.01 | 0.01 | / | 0.00 | / |
| Total Supply | 97.34 | 90.67 | -6.67 | -6.85% | 88.50 | -2.39% |
| Exports | 0.17 | 0.15 | -0.02 | -11.76% | 0.10 | -33.33% |
| Demand | 87.20 | 85.20 | -2.00 | -2.29% | 82.00 | -3.76% |
| Total Demand | 87.37 | 85.35 | -2.02 | -2.31% | 82.10 | -3.81% |

On the supply side, fermentation-grade edible ethanol: Operating rates for bio-fermentation ethanol declined. In Northeast China, major plants saw increased operating rates in the latter part of the period; Hongzhan's Bayan unit resumed, Jixian's anhydrous unit resumed, and SDIC Jidong's unit was shut down. Operating rates in East China fell: COFCO Anhui saw lower rates, while Anhui Wanshen operated normally. In Northeast China, Heilongjiang Hongzhan's unit load increased, SDIC Jidong's unit shut down, and SDIC Hailun and Tieling units ran steadily. Jilin Fuel operated normally; Jilin Fukang's Lines 3 and 4 ran normally; Jilin Xintianlong operated normally, and Dongfeng Hualiang's unit shut down at end-April. In the Mengzhou area of Henan, Houyuan and Huaxing units ran stably, Hanyong resumed after a brief shutdown, and Xinxiang's unit was shut down. Guangxi area saw stable operations: COFCO Guangxi's load was low, Guangxi Jinyuan's unit shut down, Guangxi Xintiande operated normally, all molasses ethanol units were shut down, and plants sold from inventory. Coal-based ethanol operating rates rose: Jingmen Yuanhan, Baling Petrochemical, and Henan Ruibai units resumed normal production; Anhui Carbon Xinjiang unit shut down for one week. Yulin Kaiyue and Yulin Shenneng units operated normally; Henan Liyuan unit and Xinjiang Tianye unit ran on one line; Shandong Hengxin ran at 70% load; Huizhou Yuxin unit operated normally.

On the demand side, liquor demand declined this month. For chemicals, ethyl acetate operating rates fell in May: Yankuang's unit shut down, Ningxia Ruiyuan's unit shut down, and demand decreased. Operating rates for dimethyl carbonate (EMC) declined: Lihuayi's unit shut down, Shida reduced output, while aldehyde plants maintained normal loads. Demand from major refineries and end-users was average.

II. Limited Cost Support, Losses Across the Ethanol Industry Chain

Monthly Profit Change Table for Ethanol and Upstream Products (Unit: CNY/ton)

| Category | Product | Previous Period | Current Period | Change |
|----------|---------|----------------|----------------|--------|
| This Product | NE Corn 95% Ethanol | -9.05 | -207.76 | -198.71 |
| | North Jiangsu Cassava 95% Ethanol | -292.38 | -502.50 | -210.12 |
| | NE Fuel Ethanol | 232.58 | 323.90 | 91.32 |
| | Guangxi Molasses Ethanol | 830.53 | 703.33 | -127.20 |
| | Coal-based Ethanol | 250.00 | 300.00 | 50.00 |
| Downstream | Ethyl Acetate | 29.78 | 99.23 | 69.45 |
| | Dimethyl Carbonate (EMC) | 1260.80 | 781.40 | -479.40 |

Domestic average profit for Heilongjiang corn ethanol stood at -207.76 CNY/ton, down 2195.69 CNY/ton month-on-month. Domestic average profit for North Jiangsu cassava ethanol was -502.50 CNY/ton, down 210.12 CNY/ton from the previous period. Domestic average profit for Guangxi molasses ethanol was 703.33 CNY/ton, down 127.20 CNY/ton from the previous period. During the month, raw material prices rose for Northeast corn and Thai cassava chips, while molasses prices held steady. Ethanol prices declined at a steeper pace, widening losses for corn and cassava ethanol producers, while molasses ethanol profit margins narrowed.

III. Limited Downstream Drivers, Ethanol Prices Unlikely to Rise

June forecast: The domestic ethanol market is expected to remain stable next period. Fermentation-grade ethanol supply in major producing regions is anticipated to decline in June, while chemical demand is expected to increase slightly, keeping prices steady. Coal-based ethanol operating rates are set to drop. However, bio-fermentation ethanol currently enjoys a significant price advantage, and chemical users show a stronger preference for consuming bio-fermentation ethanol. This could lead to a build-up in coal-based ethanol inventories. In the short term, supported by the supply-side tailwind, prices are likely to be stable or slightly firm. In the longer term, falling demand may erode the price advantage, making a price decline possible. Corn-based regular-grade ethanol in Northeast Heilongjiang is expected to be priced in the range of 5100-5200 CNY/ton in June.