Center-South Brazil hydrous ethanol sales jump 26% in February

Domestic hydrous ethanol sales by mills in Center-South Brazil totaled 1.11 billion liters in February, 26.2% higher than the 811.8 million liters sold in January, data from Brazilian sugarcane industry group UNICA showed March 14.

Although hydrous sales showed a monthly increase, sales year-on-year recorded a 28.8% drop over the same period in 2021.

The quantity of anhydrous ethanol sold to the domestic market during February totaled 842.04 million liters, 5.9% higher than the 794.8 million liters recorded in January, and 14.6% higher than the same period in 2021.

The increase in February sales of hydrous ethanol can be explained by the favorable hydrous ethanol price ratio to gasoline during February when compared to January, according to multiple market sources.

The Southeast hydrous ethanol price ratio to gasoline remained relatively unchanged at 68.54% in the week ended March 12 from the 68.53% ratio observed the week prior, National Petroleum and Biofuel Agency data showed.

The hydrous ethanol price ratio to gasoline during H1 March averaged 68.5%, below the 70% threshold that discourages demand from consumers for hydrous ethanol, or E100, because of its lower energy content.

The absolute price differential between gasoline and hydrous ethanol at the majority of gas stations in Brazil's Center-South was Real 2.077/l March 12, above the Real 1/l mark that typically encourages demand from consumers.

A price differential of Real 2.077/l between gasoline and E100 could encourage consumers to favor less-expensive hydrous ethanol when considering savings of around Real 104 while refilling an average-sized tank.

Consumers with flex-fuel vehicles can opt for E100 or gasoline, which has a blend of 27.5% anhydrous ethanol. Consumers generally fill up with E100 only when its price is 70% or less than the gasoline price, because of hydrous' lower energy content, or if the absolute gasoline-to-E100 price premium increases well above the Real 1/l mark.