Tight supply pushes Brazil ethanol prices higher

30 August 2011 19:47  [Source: ICIS news]

HOUSTON (ICIS)--Brazilian ethanol prices posted new gains in the fourth week of August, lifted by continued tight supply in the spot market, research group CEPEA said on Tuesday.

CEPEA assessed anhydrous ethanol at Brazilian reais (R) 1.4321/litre ($3.41/gal, €0.62/litre) last week, up by 3.9% from R1.3786/litre in the week ended 19 August.

Hydrous ethanol was assessed at R1.2468/litre, up by 3.0% from R1.2102/litre a week earlier, the research group said.

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

The Brazilian government on Monday announced it planned to cut the blend requirement in gasoline to 20% from 25%, to avoid potential ethanol supply shortages in the coming months.

The reduction in the blend level, which will go into effect on 1 October, comes as Brazil is increasingly resorting to imports of US ethanol to meet anhydrous demand.

CEPEA prices are ex-tank and do not include taxes.

($1 = R1.59)
($1 = €0.69)

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