China Ethanol price spiked in the domestic market due to high demand from pharma industry amid constraint supply

Chinese market has proven to be the most volatile market during past few months, as the dynamics are changing far more frequently than any other major economies. Recently, Ethanol prices in China spiked up on the back of high domestic demand and limited availability in the country. As per ChemAnalyst sources, despite most of the industries are going through stringent production cuts, demand from pharma industry outshined other major consumer segments.

High volatility of China’s market has brought uncertainties, which is the major concern for domestic traders, as they are unable the determine whether to buy or sell. These uncertainties have been observed for Ethanol during past few weeks, as the demand from the domestic pharmaceutical sector remained firm, while manufacturers and traders are unable to satisfy the overall requirement. However, limited availability is not the only factor that pushing up the price of Ethanol, soaring raw material cost also played a key role behind this steep price escalation.

From past few months, China has been facing the issue of low corn availability while domestic demand was high, corn is major raw material for the production of Ethanol in China. Further, China has started procuring more corn from USA in order to satisfy the demand of the country during Beijing Olympics and Lunar holidays. However, these procurements have been contracted on high premium, which is also supporting upward price movement in the country.

As per ChemAnalyst analysis, Ethanol prices are expected to remain firm for further period in the country, as the demand from not only pharma but other industries are also rising. However, as per the estimation, China might improve their output for corn during upcoming cropping season, as issues related to fertilizers and weather seems to be getting improved. Conclusively, Ethanol prices might remain firm for further period i.e., for upcoming 4-6 weeks in China, which may get decline earlier if China resume its imports from USA.