Brazilian hydrous ethanol sales drop 16.3% on year: ANP

Santos — Hydrous ethanol sales in Brazil totaled 1.56 billion liters in August, a 16.3% drop from the same month a year ago, National Petroleum, Biofuel, and Gas Agency data published late Sept. 30 showed.

The E100 sales data also showed a cumulative 16.9% drop from January through August, compared with the same eight-month period of 2019.

Since the start of the social-isolation measures to stem the coronavirus outbreak, hydrous ethanol sales in Brazil have been recording a higher drop in consumption compared with the fossil fuel competitive, gasoline C, which has a mandatory blend of 27% anhydrous ethanol.

Gasoline C sales in August added 2.93 billion liters, down 10% from year-ago levels, and in line with the cumulative trend observed so far in 2020, where total sales fell 10.4% from 2019.

Market participants were already considering a smaller sales recovery from July to August compared with increases obtained from June to July.

When seasonality aspects are offset from the analysis, hydrous sales from June to July rose 9.79%, while from July to August it actually fell 1%.

Breaking the sales numbers in regions, North-Northeast Brazil recorded a smaller drop in sales of both hydrous and gasoline C.

NNE hydrous ethanol sales in August added 128.5 million liters, down 3% from the same month a year ago, while gasoline was at 932.3 million liters, a 6% year-on-year slide, suggesting more flex-fuel drivers started to favor the E100 consumption in the region despite an unfavorable price at pumps.

Hydrous ethanol offers an economic advantage over gasoline C whenever its price is up to 70% of the fossil fuel.

The average price parity of hydrous ethanol over gasoline in the Northeast, from Aug. 3 to the last-available data Aug. 24, was at 76.35% while, in the North, the average was at 80.97%.

One relevant point to be considered in the Northeast is the nominal price differential between both fuels. Historically, whenever hydrous is Real 1/liter less expensive than gasoline, consumers in the region start to favor the biofuel, as was the case in August.

In the Center-South, which accounts for 92% of the cumulative Brazilian hydrous sales in 2020, the scenario was the opposite, with hydrous losing more market share than gasoline in August sales.

CS hydrous sales in August totaled 1.43 billion liters, down 17.2% from year-ago levels, while gasoline sales were at 2 billion liters, down 11.9% from the same month a year ago.

That consumption pattern has been observed since the beginning of the coronavirus outbreak in the country, when the fuel consumption drop in March was stronger in biofuel than gasoline.

In opposite to the NNE, the price has been suggesting that flex-fuel drivers, which account for more than 80% of the CS fleet, should be favoring E100 consumption.

The average price parity of hydrous ethanol over gasoline in the CS, from Aug. 3 to the last-available data Aug. 24 was at 63.81%.

Sources estimate that a fuel sales increase will start to occur in Brazil, just whenever the majority of schools restart their activities, which began to happen late September in São Paulo.