Trade Resources Industry Views Domestic Prices of Hydrous Ethanol in Brazil's Center-South Hit Five-Month Lows

Domestic Prices of Hydrous Ethanol in Brazil's Center-South Hit Five-Month Lows

Domestic prices of hydrous ethanol in Brazil's center-south -- the world's largest sugarcane growing region -- hit five-month lows Tuesday as offers continued to flood the market.

Product sold at plants in Ribeirao Preto have fallen 13% in the past two weeks to Reais 1,440/cu m (US$645.50) as of Tuesday's close, lowest in five months, according to data from Platts unit Kingsman.

Hydrous ethanol is used as a standalone biofuel in Brazil's growing flex-fuel car fleet.

Increased product availability outpacing demand is pushing prices lower, said sources.

"There was a record amount of hydrous sellers [Tuesday]," said a broker. "More than 50 mills were offering product."

Mills prioritize hydrous ethanol production at the start of the sugarcane harvest as it is more liquid and provides faster remuneration than anhydrous or sugar.

Also, current high electricity prices in Brazil are encouraging mills to maximize cogeneration and tilting the economic balance in favor of producing hydrous ethanol, which requires less energy to produce than anhydrous or sugar, leaving more energy for mills to sell

Players expect prices to remain under pressure next week as supply is expected to increase.

"Every day there is a new producer entering [the market] to sell," said a trader.

The 2014/15 sugarcane harvest in center-south Brazil officially started April 1. However, a few producers anticipated the start of the crush from mid-March, looking to benefit from the higher domestic ethanol prices seen in February and March when the region is at its intercrop period.

Source: http://news.chemnet.com/Chemical-News/detail-2301802.html
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Hydrous Ethanol Prices in Brazil's Center-South Fall to Lowest in Five Months
Topics: Chemicals