Philippines' H1 Feb domestic bioethanol reference price extends uptrend


The Philippines' domestic bioethanol reference price for the first half February rose 2.04% from H2 January to Peso 47/liter (94 cents/liter or $940/cu m), data released Wednesday by the country's Sugar Regulatory Administration showed.

The domestic bioethanol reference price has increased for five consecutive half-month cycles, the data showed. Prior to that, it had fallen 17.68% to Peso 42.42/liter from H2 July to H2 November.

The reference price for H1 February was higher than the average domestic bioethanol reference price over the 2017-2018 (October-September) season so far at Pesos 45.09/liter, the data showed.

The domestic Negros molasses price rose Pesos 370.69/mt (7.21%) to Pesos 5,511.55/mt in H1 February from H2 January, resulting in a higher equivalent feedstock cost of Peso 24.33/liter.

The equivalent sugarcane feedstock cost in H1 February was Peso 25.09/liter, equating to a sugarcane price of Peso 1,756.16/mt, up Peso 25.83/mt (1.49%) from H2 January.

The sugarcane price is expected to increase this year due to rising demand for sugar after the Tax Reform for Acceleration and Inclusion, or TRAIN, bill imposed taxes on sweetened beverages from January 1, 2018.

The tax is Pesos 6 (12 cents)/liter on drinks containing calorific or non-calorific sweeteners and Pesos 12/liter on drinks containing high-fructose corn syrup, or a combination of both. This is expected to result in an increase in sugar consumption at the expense of HFCS, S&P Global Platts Analytics reported.

Major soft drink makers have already reacted. Pepsi-Cola Products Philippines has announced it will reformulate its mix to 100% sugar from May, from 60% sugar and 40% HFCS currently, market sources said.

However, the Philippines' H1 February domestic bioethanol price was down 15.22% from Peso 55.44/liter in the same period of 2017, S&P Global Platts data showed.

The average CIF Philippines fuel ethanol price for H1 February was $482.21/cu m, making the domestic price almost double that of imported ethanol, Platts data showed.

The Philippines' domestic bioethanol reference price is calculated by adding transportation costs to the average cost of two major feedstocks for ethanol production, molasses and sugarcane.


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