US, Brazil trade groups quarrel over cheaper ethanol

15 April 2010 21:32  [Source: ICIS news]

HOUSTON (ICIS news)--A US ethanol trade group on Thursday dismissed claims by Brazil’s sugarcane industry association Unica that the US could save money by importing more sugarcane ethanol from Brazil.

The claim was made as the Brazilian group launched a campaign in the US to promote sugarcane ethanol. The initiative included a new website, as well as print and radio advertisements.

Unica said sugarcane ethanol was on average 50 cents/gal cheaper than US corn-based ethanol, a figure that was heatedly disputed by the Renewable Fuels Association (RFA), the main US ethanol group.

“The numbers don’t add up,” the RFA said, charging that Unica was using “fuzzy math” and that Brazilian ethanol was actually more expensive than ethanol made in the US.

US drivers would spend an additional 7 cents/gal using gasoline blended with imported Brazilian ethanol, the RFA said, arguing that Unica omitted prices for 2009 and 2010 in its analysis.

“The table comparing Brazilian sugarcane ethanol prices to US corn ethanol prices conveniently ends with 2008 prices,” the group said, alluding to a surge in Brazilian ethanol prices caused by inclement weather in 2009.

A Unica representative was not immediately available to comment.

Brazil’s anhydrous ethanol prices were assessed at $2.27/gal FOB (free on board) Santos in the week ended 14 April, according to global chemical market intelligence service ICIS pricing.

US anhydrous ethanol was assessed at $1.41/gal FOB midwest in the same period.

The push by Unica into the US comes in a year when Congress has said it would consider extending a 54-cent/gal tariff to Brazilian ethanol while debating whether it would continue to subsidise local production of the biofuel via a 45-cent/gal tax break.

The US ethanol industry has sought an extension of five years on the tariff and the subsidies, which are scheduled to expire at the end of 2010, claiming government support was needed for the continued development of the industry.

Unica was a fierce critic of the tariff, saying the restriction went against free-trade principles and prevented Brazilian ethanol from competing on a level field with the US product.

For more on ethanol visit ICIS chemical intelligence
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By: William Lemos
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