Brazil 2008 ethanol surplus seen at 5bn litres

05 March 2008 17:55  [Source: ICIS news]

SAO PAULO (ICIS news)--Brazil will have 5bn litres of ethanol surplus in 2008 that could be used to help meet growing demand in Europe and the US, an F.O. Licht official said on Wednesday.

Brazil is expected to produce 25bn litres of ethanol in 2008, but will only use 20bn litres to supply its internal market, said Christoph Berg, managing director at F. O. Licht.

Brazil will continue to ship ethanol to the Caribbean and Europe in 2008, but it is possible that a window will open to ship material directly to the US this year, he said during an industry event in Sao Paulo.

“Maybe that will come with the beginning of the [US] driving season in May,” Berg said.

Brazilian material could be strategically used to meet demand in the southeast region, where consumption is poised to boom.

The arbitrage window for Brazil to ship ethanol directly to the US is closed due to a 54 cent/gal tariff the US levies on Brazilian ethanol.

As an alternative to bypass the tariff, Brazil ships ethanol to Caribbean Basin Initiative (CBI) countries, which then reprocess the material and send it tax-free to the US.

Berg said slow production in Europe would keep the region dependent on imports to meet demand in the coming years.

European production is increasing, but not fast enough, he said, predicting that the EU would likely fail to meet a 2010 target to blend biofuels into motor fuel at 5.75%.

Berg spoke at F. O. Licht's Sugar and Ethanol Brazil 2008 event.  The event was organised in partnership with IBC Brasil.

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By: William Lemos
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