Chinese ethanol imports are expected to increase in coming months, stimulated by lower prices compared to local production, Reuters reported last week, citing trade sources.
Imports, however, could decelerate by the end of the year as the government is expected to reduce corn prices. Talk of such a move has already pushed down futures prices.
A China-based agent with an international trading company told the news agency that most buyers look to make purchases before December arrivals due to concerns about policy reforms or a price down-trend. According to the source, imports from the US will really rise between June and November.
In the first seven months of 2015, China's ethanol imports amounted to 126,000 tonnes, nearly five times the quantity imported in the whole 2014, according to official data, with the spike reflecting substantially lower prices in Brazil and the US. At least 50,000 tonnes have been bought in August and early September, Reuters said, citing a trader.
Imports are also being driven by low production in China, where the ethanol price is set as a percentage of the price of gasoline. Corn prices, however, are well above global markets due to a stockpiling policy by the government designed to increase rural incomes.