Philippines' Jul bioethanol reference price rises 0.7% on month to 19-month high

09.08.2018

The Philippines' domestic bioethanol reference price for July rose 0.65% from June to a 19-month high of Pesos 58.12/liter ($1,162/cu m), data released Wednesday by the Sugar Regulatory Administration showed.

Negros molasses, an ethanol feedstock, rose 1.83% month on month in July to a ten-month high at Pesos 8,256.67/mt, resulting in a higher equivalent feedstock cost of Pesos 35.52/liter, the data showed.

The equivalent cost of another feedstock, sugarcane, stood at Pesos 36.12/liter in July, up 0.42% from June, due mainly to higher sugarcane prices. The average price of sugarcane in July was Pesos 2,528.33/mt compared to Pesos 2,517.73/mt in June.

However, in H2 July domestic price of sugar declined for the first time in half-monthly cycles from the beginning of the year due to SRA allowing sugar imports for the first time since 2016. The SRA allowed 200,000 mt of sugar imports in June and cargoes started flowing into the country in August, market sources said.

Philippines was grappling with high domestic sugar prices this year, after the Tax Reform for Acceleration and Inclusion, or TRAIN bill, introduced taxes on sweetened beverages from January 1, 2018. The TRAIN bill imposed a Pesos 6/liter ($0.12/liter) tax on drinks containing calorific or non-calorific sweeteners, and Pesos 12/liter tax on drinks containing high-fructose corn syrup, or a combination of both.

This is estimated to have increased in sugar demand at the expense of HFCS, according to S&P Global Platts Analytics. Major beverage companies in Philippines opted to switch HFCS with sugar in their production process, industry sources said.

Ethanol in the Philippines will remain on an uptrend until the third quarter, and prices will only ease at the start of Q4 when more molasses are expected to be produced, a Philippine ethanol buyer said.

The average CIF Philippines fuel ethanol price for July was $465.09/cu m, which was less than half of domestic prices, even after including 1% import duty and 12% value added tax.

The Philippines' domestic bioethanol reference price is calculated by adding transportation costs to the average cost of the two major feedstocks.


spglobal

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