After the production freeze meeting, the expected reduction in production combined with international political and macro factors, the price of crude oil stabilized and recovered, driving the price of fuel ethanol as an alternative biomass energy to rise simultaneously. Shen Wan Hongyuan bullish fuel ethanol industry boom recovery. Corn destocking has become a major issue fuel ethanol globally is considered to be a clean and efficient biomass energy. However, its development in China has experienced twists and turns. In particular, ethanol, a grain fuel, was once eliminated from a series of subsidies because it consumed too much corn resources, “competing with livestock for grain and competing with people for land”. However, the introduction of the agricultural supply-side structural reform policy marked a shift in China’s food policy, as the country began to reduce the area planted with corn in a planned way and accelerate the liquidation of stocks. Fuel ethanol is expected to become the starting point of corn supply side reform, help to consume corn inventory, so as to usher in new development opportunities. China’s total corn stockpile reached 260 million tons in the fall of 2016, 1.55 times its production, according to data from China Central Exchange. Based on the annual inventory cost of 250 yuan per ton of corn, the inventory cost of 260 million tons of corn is as high as 65 billion yuan. From the industrial development situation, the development of fuel ethanol will also enter a new journey: crude oil price began to climb to the bottom, the price of corn (raw material) is low. The fuel ethanol industry is now expected to be profitable without subsidies, compared with 2010, and is likely to accelerate as oil prices rise. So the policy is just pushing hand, more importantly, the industry boom is really in a significant rise, significant improvement. After the signing of the OPEC production freeze agreement, the crude oil price has been confirmed to be in a volatile upward range, benefiting from the supply contraction caused by the production freeze. It is expected that the average price of crude oil in 2017 will range from $50 to $60 per barrel, and the fluctuation range may be $45 to $65 per barrel, or even $70 per barrel
Post time: Oct-21-2022