Brazil's July hydrous ethanol sales rise to highest level since Feb

santos — Brazilian hydrous ethanol sales in July surged 13.1% on the month to 1.51 billion liters, the highest volume since February when the country consumed 1.77 billion liters, before restrictions were imposed due to the coronavirus pandemic, according to the National Petroleum, Gas and Biofuel Agency, ANP.

July sales showed a substantial month-on-month increase for hydrous fuel, as since May the monthly sales increased 5% and then 5.3%.

Even with the increased demand for E100 standalone biofuel, the hydrous share in the Otto cycle in gasoline equivalent was at 26.2%, slightly up from 25.6% in June but down from 28.8% in July 2019.

Total ethanol share in the Otto cycle was at 46.1%, a drop of 1.90 percentage points on the year.

In the first seven months of 2020, hydrous ethanol sales reached 10.47 billion liters, a fall of 17% from the same period in 2019, while anhydrous ethanol cumulative sales were at 5.25 billion liters, down 10.5% on the year.

The mismatch between hydrous and anhydrous declines reflects the fuel consumption behavior during the social isolation months, when consumers favored gasoline consumption blended with 27% anhydrous over hydrous ethanol.

Market participants could not identify the main reason behind the consumers' choice, as the price of E100 to gasoline in the southeast region has been below the 70% threshold since March 30.

While demand was still lower than in 2020, ethanol production was also lower on the year, as producers have been favoring sugar production in the Center-South region.

From April 1 to Aug. 16, hydrous ethanol production dropped 4.73% to be recorded at 11.85 billion liters, while anhydrous fell 10.30% to 4.95 billion liters.

The larger drop in anhydrous production combined with a smaller decline in gasoline sales compared with hydrous has translated to lower built-in stocks of anhydrous when compared to 2019 and difficulties to find anhydrous in the domestic market.

S&P Global Platts assessed anhydrous ethanol ex-mill Ribeirao Preto at Real 2,140/cu m ($396.38/cu m) on Sept. 1, up 6.73% from a year ago. The year-on-year price jump proves that despite the cumulative anhydrous sales recorded in 2020 at 10.5% lower on the year, the production cut and closed arbitrage for imports have been supporting domestic prices, sources said.