Brazil ethanol prices continue to drop on supply

04 November 2008 16:12  [Source: ICIS news]

HOUSTON (ICIS news)--Brazilian ethanol prices continued to drop in the week ended 31 October, pressured by ample supply in the spot market, research group Cepea said on Tuesday.

Cepea assessed anhydrous ethanol at Brazilian reais (R) 0.8783/litre ($1.52/gal), down by 1% from R0.8874/litre a week earlier.

Hydrous ethanol was assessed at R0.6838/litre, down by 3.8% from R0.7112/litre in the previous week.

Cepea’s price assessments are ex-tank and do not include taxes.

The softening in Brazilian prices in recent weeks was triggered by the global credit tightening, which has forced Brazilian producers to increasingly rely on the local spot market for short-term cash needs.

A sudden jump in spot offers since September has eroded price support, according to market sources.

Brazil uses hydrous ethanol as a stand-alone fuel in flexible-fuel vehicles (FFVs), while anhydrous is blended in regular gasoline at 25%.

($1 = R2.18)

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By: William Lemos
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