Chemical News
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Northeast China ethanol prices stable in July despite severe drought
http://www.chemnet.com Jul 30,2015 Platts
Crops in China's northeastern region have been hit by a severe drought since July 1.
According to the Ministry of Agriculture, rainfall in the province of Liaoning for the period of July 1-24 was 72.2% lower year on year, making it the lowest rainfall levels in 64 years and leaving 250,000 people short of potable water.
The government issued a drought warning on July 21.
According to official reports, over 1.5 million hectares of crops have been affected, out of which 8.4% have withered, 36.8% have been severely affected and 54.8% have been lightly affected.
The size of the areas affected doubled from one week prior.
The drought hit at a critical time for farmers in Liaoning and Jilin, as the time period from late July to early August is the jointing stage for corn crops.
Corn grows rapidly during the jointing stage, and a lack of water affects eventual yields.
However, local ethanol prices in northeast China have not seen any impact, as beverage-grade ethanol prices were unchanged week on week at Yuan 5,750/mt ($926/mt) on an ex-factory basis.
According to a USDA report, over 76% of ethanol in China is produced using corn feedstock, and the northeastern provinces are located in major corn production regions.
"The government stockpiles are large, and supply is larger than demand," another Chinese producer said. "Liaoning is not the only province supplying corn -- there should not be an impact on feedstock or ethanol prices."
Meanwhile, ethanol prices in eastern China are experiencing a slight downturn, with industrial grade ethanol being offered at Yuan 5,650/mt ($910/mt) on an ex-factory basis.
This was down slightly from Yuan 5,730/mt ($922/mt) for the previous two weeks.
Liaoning has pumped in Yuan 241 million to combat the drought through water trucks and diversions, while Jilin has used cloud seeding.
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