Ethanol Prices Increase in the USA Amidst Rising Demand, Asia and Europe Shows Bearish Trend

The prices of Ethanol show contrasting trends in the US market compared to Asia-Pacific & European region as prices of Ethanol increased this week in the US, whereas at the same time, prices were stable in the Chinese market. Furthermore, European market prices decremented amid economic uncertainty, firm inflation rates, and declining demand. Europe is facing economic uncertainty while the US market is experiencing stability in the economic situation, causing variable market fundamentals worldwide.

In the US market, prices of Ethanol have incremented on the backdrop of an improved economic situation as the Federal Reserve has decided to leave the interest rate unchanged. Moreover, the US Department of Agriculture announced funding to invest upto $500 million for homegrown biofuels to increase the availability of domestic biofuels, expecting to create optimistic market sentiments. Furthermore, the demand from the downstream biofuel industries has increased amid low inventories to meet downstream demand. Additionally, input production cost has incremented due to a significant increment in Natural Gas prices.

In the German market, the prices of Ethanol have dropped significantly, and it was due to economic uncertainty and weak demand fundamentals amid relief in energy prices. Moreover, due to the price decrement, there was wait-and-watch sentiment among downstream buyers. Additionally, there was a stable flow of inventories in the domestic market with decreased demand from the downstream industries like biofuel, food & beverages. Furthermore, new orders were procured on a need-on-demand basis from the downstream industries.

In China, Ethanol prices were stable this week due to no significant change in demand from the downstream industry, which subdued the market growth as there was a deflation problem in China as factory gate prices fell due to weak demand from the downstream industries causing a slowing manufacturing sector in China. Furthermore, amid adequate inventories level in the market to meet downstream demand, several plants were operating slower due to low demand from the downstream industry.

As per the ChemAnalyst database, ‘The prices of Ethanol in the US market are expected to show bearish market trends in upcoming months due to Federal reserve in the US has announced likely increment in interest rate in the upcoming months which will negatively impact the Ethanol market. In the German Market, Ethanol prices are expected to show a bullish trend due to high demand from the downstream biofuel and food & beverages industries. Ethanol prices in China are expected to increase in the coming quarter due to high demand from the downstream biofuel industries amid improved economic conditions and a positive manufacturing sector outlook.