NE Asian hydrous ethanol mixed on weak sentiment, growing supply

27 August 2012 08:13  [Source: ICIS news]

SINGAPORE (ICIS)--Hydrous ethanol prices in northeast Asia are mixed on the back of bearish buying sentiment and growing stock at the port of Ulsan in South Korea, market sources said on Monday.

Prices were assessed at $670-690/cbm (€536-552/cbm) CFR (cost & freight) northeast Asia in the week ended 22 August, with trade centred on shipments for the first quarter of 2013, according to data from ICIS.

Offers of cane-based hydrous ethanol from Brazil fell by $10/cbm CFR Ulsan to $690-700/cbm CFR Ulsan in line with weak biofuel demand from the US and news of increased cane output amid favourable weather conditions in Brazil’s centre-south region, which is the country’s highest cane-producing sector.

Cane is harvested in this region usually in April-December.

“Demand for advanced biofuel ethanol from the US has weakened as the arbitrage window between Brazil and the US has narrowed.

“As a result, Brazil offered its available supply to northeast Asia at lower prices since producers there are able to convert anhydrous ethanol, which is used as a biofuel, to hydrous B-grade ethanol,” a southeast Asia-based trader said.

However, demand is weak as buyers in main importing country Japan remain covered until October-November, with some customers’ inventories ample until December.

Buying ideas were notional at $650-670/cbm CFR Ulsan, amid weak demand and ample availability.

“Although storage capacity in Ulsan is not as full as levels seen around two months ago, some traders are still holding long positions there. Some even have shipments from both Brazil and Pakistan on the waters en route to Ulsan,” a Japanese trader said.

According to market players, enquiries made during the week were centred on first quarter-delivery parcels for 2013, with some of the pending supply able to meet the demand for January cargo requirements.

($1 = €0.80)

By: Andrea Heng
+65 6780 4359

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