China's ethanol imports surge to 21-month high of 197,652 cu m in Feb
China's ethanol imports surged by 64% month on month to 197,652 cu m in February -- the highest in 21 months, data released Tuesday by the General Administration of Customs showed.
Imports were last higher in May 2016 at 263,388 cu m, the data showed.
Chinese ethanol imports have been robust so far this year, with volumes surging to 318,354 cu m over January-February from 2,424 cu m in the same period last year.
The rise was attributed to lower ethanol prices in the US during the fourth quarter which opened up the arbitrage window despite China's 30% import duty on denatured ethanol, resulting in Chinese companies ramping up purchases for Q1 delivery, market sources said.
Chicago Argo ethanol prices averaged $1.5222/gal ($402.12/cu m) during the first three quarters of 2017, compared with an average of $1.3769/gal ($363.73/cu m) in Q4, S&P Global Platts data showed.
Of China's total 189,038 cu m of denatured ethanol imports in February, 189,034 cu m came from the US.
Over January-February, China imported 280,317 cu m of denatured ethanol from the US -- exceeding earlier market expectations of 200,000 cu m of US ethanol fixed for delivery to China during Q1, market sources said.
However, the statement on Friday by China's Ministry of Commerce that it may impose an additional 15% duty, along with the existing 30% duty, on denatured ethanol imports from the US is likely to keep the arbitrage window from the US closed for the rest of the year, traders said.
"The hike in import duty [for denatured ethanol from the US to China] to 45% will kill imports into China, much like it did in 2017," a trader said.
China's ethanol imports in 2017 were severely impacted by the rollout of the 30% import duty on denatured ethanol in January 2017. As a result, denatured ethanol imports into China had plunged to 8,697 cu m in 2017, from 871,829 cu m in 2016, Chinese customs data showed.
China's undenatured ethanol imports in February slid by 71% month on month to 8,614 cu m, with almost all the imports from Pakistan at 8,607 cu m. Moving to exports, Chinese exports of ethanol fell by 28% from January to 2,058 cu m in February, the data showed.
In February, all of China's exports were for undenatured ethanol, with 1,710 cu m exported to North Korea.