Brazil ethanol prices drop on looser supply, weak demand

31 January 2012 17:01  [Source: ICIS news]

HOUSTON (ICIS)--Brazil ethanol prices continued to fall last week, pressured by weaker demand and looser supply, research group CEPEA said on Tuesday.

CEPEA assessed hydrous ethanol last week at Brazilian reais (R) 1.0956/litre ($2.37/gal, €0.48/litre), down by 5.6% from R1.1601/litre in the week that ended on 20 January.

Anhydrous ethanol prices were assessed at R1.1652/litre, down by 7.2% from R1.2558/litre a week earlier.

Hydrous ethanol is used in Brazil as a stand–alone fuel in flexible-fuel vehicles (FFVs), competing directly with gasoline, while anhydrous ethanol is blended in gasoline at a mandated 20%.

Ethanol prices in Brazil have dropped in part as a result of supply pressure caused by a flurry of anhydrous ethanol imports from the US in recent months.

Market sources have also pointed to weaker hydrous ethanol demand because of competition from gasoline.

The drop last week put the reduction for anhydrous ethanol in January at 13.6%, CEPEA said, adding that hydrous prices have fallen by 8.3% since the last week of December.

($1 = €0.76)  ($1 = R1.75)

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By: William Lemos
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