Ethanol's competitiveness in Southeast Brazil lowest in almost 8 years: ANP

23.07.2018

The pump price of hydrous ethanol in Southeastern Brazil averaged 60.31% of gasoline for July 8-14, compared with 60.81% the week before, data from the National Petroleum Agency showed Tuesday.

The ratio is the lowest since the week of September 27-October 2, 2010.

Hydrous fuel ethanol is used as E100 in flex-fuel vehicles and competes with gasoline at the pump, where it is competitive when its price is 70% or less than the gasoline price. Gasoline has 30% more energy content than its competitor, hydrous.

Hydrous prices at the pump averaged Real 2.712/liter, down 1.1% from a week ago while gasoline prices were Real 4.497/liter, down 0.3% showed ANP data.

Prices remain more competitive than gasoline at the pumps and have been improving the parity towards the biofuel in July as hydrous has been decreasing while gasoline has been readjusted higher by Petrobras.

From July 1 to 16, Petrobras revisions of ex-refinery gasoline prices have accumulated a 2.5% increase, while hydrous ex-mill Ribeirao Preto assessed by S&P Global Platts has dropped accumulated a 3% decrease.

Despite the more attractive prices at the pumps, hydrous consumption has not been able to keep up with surging production rates.

Due to a stronger remuneration compared to sugar, hydrous output in the 2018-19 season (April 1 to June 30) has risen over 76% from a year ago at 7.77 billion liters, according to data from industry association UNICA.

Therefore, the amount of ethanol available in the domestic market has been pressuring spot prices in recent weeks.

On Tuesday, Platts assessed hydrous ex-mill Ribeirao Preto at Real 1,830/cu m, down 15% since the beginning of the crop in April.

S&P Platts Global Analytics estimates 60.5% of the cane crush to be directed to ethanol, compared with 53.4% in the past season.

This should translate to a total of 27.72 billion liters, up 6%. Out of this total hydrous ethanol production is expected to reach 17.8 billion liters, up 17% from the previous season.


spglobal

Readers choice: TOP-5 articles of the month by UkrAgroConsult