APLA ’12: Brazil exchange mulls launch of new ethanol contract

13 November 2012 18:28  [Source: ICIS news]

RIO DE JANEIRO (ICIS)--Brazil’s mercantile and futures exchange (BM&FBovespa) may launch an anhydrous ethanol contract, a market source familiar with discussions at the exchange said on Tuesday.

BM&FBovespa is holding talks with the industry this week, the source said, adding that the contract would be for Santos delivery on an FOB (free on board) basis.

The exchange’s press office in Sao Paulo did not immediately respond to a request for comment.

BM&FBovespa already has a contract for hydrous ethanol, which is based for delivery in the city of Paulinia, around 120 kilometres northwest of the city of Sao Paulo.

Brazil uses hydrous ethanol as a stand-alone fuel in flexible-fuel vehicles (FFV), while anhydrous ethanol is blended in gasoline at a mandated 20%.

Ethanol demand is Brazil is growing at the level of GDP, a market source said on the sidelines of the Latin American Petrochemical Association (APLA) annual meeting.

Brazil’s GDP is expected to grow by a meager 1.5% this year, but growth is expected to accelerate to 4% in 2013, according to projections.

The APLA conference ended on Tuesday.

By: William Lemos
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