April Brazilian hydrous ethanol sales fall 33.64% on year; average price for consumers down 2.35%

Santos — Brazilian hydrous ethanol sales in April totaled 1.21 billion liters, down 18.25% from March and 33.64% lower year on year, national hydrocarbons agency ANP data showed June 1.

In the first full month with social distance measures imposed in the Brazilian territory, the decline in the fuel consumption rate was a good thermometer to measure the impacts of the coronavirus pandemic in the regional economy.

Despite the hard efforts from ethanol producers to capture a bigger share of the otto cycle fuel demand in April, the ANP data pointed that the hydrous share lowered from 43.01% in March to 42.45% in April.

S&P Global Platts assessment for hydrous ethanol ex-mill Ribeirao Preto was on average Real 1,689/cu m on April, down 25% on year, while the price for Brazilian consumers proved a lagging in the downward movement and averaged Real 3,122/cu m slightly down 2.35% on year.

The gasoline ex-refinery price movement supported most of the cuts in the hydrous demand even though a portion of the price cuts do not reach consumers. In April, the gasoline price for consumers in Brazil averaged Real 4,137/cu m, down 6.74% from a year ago.

Using those figures, the price of hydrous ethanol in the Southeastern states increased to 66.58% of the price of gasoline in April from 65.75% in April 2019, but still below the 70% threshold reference.

For consumers with flex-fuel vehicles, hydrous ethanol offers an economic advantage over gasoline when its price is 70% or less than that of gasoline because of its lower fuel economy.

The otto cycle is a measure for all the light fuels demand, or a combination of gasoline A, hydrous ethanol and anhydrous ethanol consumption.

Breaking down the figures by region, hydrous ethanol consumption in the Southeastern states totaled 852.7 million liters in April, down 32.25% year on year and 17.14% from March. The Southeast accounts for nearly 70% of total hydrous ethanol sales, while in the Center-West region the E100 sales fall 30.38% on year to 172 million liters.

Most of this consumption decline was lowered than initially estimated by market participants, which in the beginning of the social isolation measure were pointing to a drop of near 50% in the hydrous ethanol sales.

The only region which surpassed the negative consumption number was the Northeast Brazil, where hydrous sales plunged in 53.14% on the year to 63 million liters consumed. Despite the red flag in the region, the momentum was not the worse for ethanol producers from North-Northeast, which are still in the inter-crop season and therefore not producing ethanol.