Buyers in Philippines cautious on fuel ethanol demand as pandemic weighs

Traders and buyers in the Philippines' fuel ethanol market reported reduced purchase interest and increased caution following a spike in COVID-19 cases and a subsequent lockdown to limit the spread of the pandemic.

Philippines President Aug. 2 ordered a "Modified Enhanced Community Quarantine", or MECQ, status in the country's national capital region and surrounding provinces, local media reported.

"It is very quiet with buyers sitting on the sidelines", said a source who reported little inquiries.

A tender was closed earlier in August. "Going forward, I expect more tenders to be coming out but for smaller volumes, as the lockdown could had hit demand or simply because buyers had turned cautious," another market participant said.

Buyers over the week expressed caution going forward, though some were sanguine the lockdown in Metro Philippines will not be as severe as the previous full lockdown in the country and perhaps only demand in August will be affected, though some still refrained from making large purchases.

In April and May, oil companies had ceased purchases of imported ethanol and had negotiated delayed delivery of earlier booked cargoes. Most are planning to make purchases for Q4 while fulfilling local monthly allocation, or LMA.

The Philippines' Department of Energy has set its LMA for ethanol at 83,699 cu m for the last quarter of 2020, down from 86,200 cu m in Q4 2019, according to documents seen by S&P Global Platts. Nonetheless, the numbers for Q4 2020 were higher than 79,700 cu m set for Q3 2020.

Elsewhere, increasing molasses cost pushed Philippines domestic bioethanol reference price 1.15% higher month on month in July at Pesos 61.45/liter ($1,250/cu m), data released by the Sugar Regulatory Administration showed.