Pakistani ethanol supply edges out Brazil in key Asia demand center

23.08.2016

The strength of Brazil's industrial ethanol complex compared with Pakistan's is seeing Korean end-users seek out supply from Pakistan, trading sources said Monday.

S&P Global Platts assessed the Grade B industrial ethanol market, basis Brazil's Paranagua port, at $550/cu m on Friday, up $5/mt and close to a five-month high, according to Platts data.

The opportunity to import industrial-grade ethanol from alternative suppliers meant that Asia's prices were held in check through much of August as the high price of Brazilian ethanol kept Asian buyers on sidelines.

No shipment was heard from Brazil to Asia for September loading dates, according to market sources. "The market has been quiet since August after three tenders were concluded last month," a Tokyo-based market source said.

While Brazilian exports lost momentum due to their increased price, Pakistani product was heard offered around $20-$25/cu m below Brazilian cargoes. Two deals were heard at the end of last week at $575-$580/cu m. Some Asian trading sources said they were planning to shift to Pakistani product because Pakistani extra neutral alcohol ethanol was even cheaper than the lowest level seen for Brazilian hydrous ethanol.

Platts does not publish daily assessed prices for Pakistani ethanol, but prices in the Korean CIF Ulsan market -- a key demand center for industrial ethanol -- have ramped up dramatically since June 1, rising from $520/cu m to hit $592/cu m on August 10.

From then on, prices have plateaued before easing back to end Monday at $580/cu m, according to Platts data.

However, the general concern for the Pakistani market at the moment is whether there is enough volume available to feed the demand.

"The supply is very limited. And as the peak of production season [in Pakistan] would start at the end of November or early December, the price should be higher in two to three months," a Pakistani market source said.

At least one vessel was reported leaving the country in August to Ulsan, data from Williams Brazil Agency showed last week. The vessel, Ambassador Norris, which on August 18 was in Santos port, is waiting to load roughly 37 million liters of ethanol, data showed.



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