Brazil demand for ethanol exceeds gasoline in May - trade group

08 July 2010 21:51  [Source: ICIS news]

HOUSTON (ICIS news)--Brazilian fuel ethanol demand surpassed that of gasoline in May, sugarcane industry association Unica said on Thursday, citing continued growth in the country’s flexible-fuel vehicle (FFV) market.

Ethanol demand in May reached 1.87bn litres, 7.72% more than the gasoline volume for the month, Unica said, quoting data from Brazil’s National Petroleum Agency (ANP).

The figure includes demand for hydrous and anhydrous ethanol, the association said.

Brazil blends anhydrous ethanol in gasoline at a mandated 25%, while hydrous ethanol is used as a stand-alone fuel in FFVs.

FFVs account for around 90% of Brazil’s automobile sales.

Unica said May was the first month in 2010 during which consumption of the biofuel topped that of gasoline.

The increase was partly due to a jump in the consumption of anhydrous ethanol that month, as Brazil raised its mandated blend level back to 25% from 20% on 1 May.

Ethanol demand also rose because of a reduction in hydrous ethanol prices, which made the product cheaper than gasoline and attracted more FFVs to the pump.

Demand for hydrous ethanol remained strong in the first half of June, but a renewed uptrend in Brazil could dampen consumption of the biofuel in July, a fuel distributor said.

Hydrous ethanol prices were assessed at Brazilian reais (R) 930-950/cubic metre ($1.99-2.03/gal) during the week ended 7 July, up on average by 12.6% from R830-840/ cubic metre four weeks earlier, according to ICIS.

Brazil is the world’s second-largest ethanol producer after the US, but the top consumer of the biofuel on a percentage basis.

($1 = R1.77)

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By: William Lemos
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