Brazilian hydrous ethanol prices rise as producers stockpile fuel

Strong hydrous ethanol prices in the southeast Brazilian market have led to a higher parity against gasoline for the first time in six months, the latest data from Brazil’s National Petroleum Agency (ANP) shows.

According to the data, the southeast region hydrous ethanol prices averaged 61.5% of the price of gasoline, up from 61.3% in the previous week.

The fuel's price parity against gasoline deteriorated for the first time in the past 24 weeks.

Hydrous ethanol is used in Brazil as a standalone biofuel (E100) for flex-fuel vehicles.

To be more competitive than gasoline, E100 has to be below 70% of the price of gasoline.

The ANP data shows that prices at the pump have increased 0.9% from the last week.

Domestic prices for ethanol in the key Center-South sugarcane region, which includes the southeast region used by the ANP for its price data, have been firmer in recent weeks as the larger producers stayed out of the spot market.

Instead, they have been stockpiling product in the hope of obtaining better prices during the intercrop season, when many anticipate prices will have to rise to rein in demand.

Gasoline sales have declined in Brazil’s Centre-South region during the sugarcane harvest season, which has translated into an upward climb for ethanol consumption.

Demand for hydrous ethanol in the region reached 1.35 billion litres in June, which is up 53% from June 2014 and 4% from this May.

Cumulative hydrous consumption in the first half of 2015 was nearly 7.65 billion litres, an increase of 36% from last year.