FocusBrazil government, industry differ on imports of US ethanol

15 January 2014 21:34  [Source: ICIS news]

By Leo Siqueira

CAMPINAS, Brazil (ICIS)--Brazil taking advantage of a “punctual” opportunity to import cheap ethanol from the US will not harm the domestic industry, a government official said on Wednesday.

But imports of US ethanol to Brazil's northeast may harm the region's competitiveness, an executive said.

According to Renato Cunha, president of sugar and ethanol association Sindacucar, bringing US ethanol for a region that has an ongoing sugarcane harvest is a "contradiction".

"This is a contradiction, even [now], in a crop year when the country is preponderantly a strong exporter," he said, adding Brazil's northeast is having a continuous ethanol supply.

Cunha's comments follow the Brazilian government’s recent reduction to zero of the PIS and Cofins taxes for ethanol imports. The measure is valid until 31 December 2016.

According to Cunha, the importing of ethanol and other climate factors will cause to Pernambuco an estimated loss of Brazilian reais (R) 400m ($170m) in the state's current harvest.

Marco Antônio Almeida, natural gas and oil secretary at Brazil's mines and energy ministry, said Brazil should export about 2.5bn litres (661m gals) of ethanol to the US and may import between 180 and 250m litres of the fuel within the 2013-2014 sugarcane harvest.

"These imports are understood as punctual opportunities to take advantage of prices, particularly due to the start of the [sugarcane] off-season in the centre-south region," he said, adding that the region tends to have low price hikes within this period.

"Within this scenario of balance of exports and imports, I can't see any harm resulting from punctual imports," Almeida said.

A recent report by Brazilian newspaper Valor said that ethanol shipments from the US should arrive at Itaqui Port, in the state of Maranhao, every 45 days this year.

Every shipment may contain up to 12m litres of ethanol, the report said.

Shipping company Alphamar, one of the sources interviewed by Valor, was not immediately available to comment on this week to confirm the amount of ethanol it may transport to Brazil.

The company told Valor that the good results of the US corn harvest as well as Brazil's growing demand for the fuel will guarantee ethanol shipments to the country all year long.

According to sugarcane industry association UNICA, Brazil’s centre-south sugar harvest season output this season rose 12% from the previous season and reached a historical high of 594m tonnes of sugar cane output, leading to both higher ethanol production and domestic sales year over year.

Brazil's centre-south and northeastern regions account for all of Brazil's ethanol production, with te centre-south supplying 90%.

($1 = R2.35)

By: Leo Siqueira
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