Brazilian drivers may continue to favor hydrous ethanol consumption despite oil price collapse: data

Santos — Despite the price collapse by international oil prices and the latest gasoline ex-refinery price adjustments, hydrous ethanol – E100 – is still technically offering an economic advantage for drivers in southeastern Brazil, government data show.

In the week that ended Saturday, the hydrous ethanol price's ratio to its gasoline counterpart was 70.16%, up slightly from 70.04% in the prior week, according to data released by the National Petroleum and Biofuel Agency (ANP) Monday. Since January 6, E100 in southeastern Brazil lost a minimum advantage of nearly 2.11 percentage points in consumers' pockets.

Consumers with flex-fuel vehicles will generally use only hydrous ethanol when its price is 70% of gasoline or less because of its lower fuel economy.

In 2019, the southeast region accounted for almost 50% of Brazil's total hydrous and gasoline C consumption.

Hydrous ethanol is not losing its advantage on the fossil fuel mostly due to the lag between Petrobras' price adjustment basis ex-refinery and the time fuel retailers change their prices at the pumps.

Since January 1, Petrobras has cut its gasoline ex-refinery prices by 34%, while the average price for consumers in the southeast dipped 1.46% from Real 4.60/liter in January to Real 4.53/liter on Saturday, according to ANP data.

In the meantime, the average hydrous ethanol price for consumers rose roughly 0.5%, an extremely loose correlation with the ex-mill price so far in 2020.

S&P Global Platts' assessment of hydrous ethanol ex-mill Ribeirao Preto fell 9.56% from an average price of Real 2,51/liter in January to Real 2.27/liter Monday.

If the coronavirus outbreak had not started to trim Brazilian fuel consumption, hydrous ethanol sales would have retained a good pace, despite the turmoil in the international oil markets.

Brazil's largest distribution companies are expecting that fuel consumption will fall nearly 10% in March and further 30% in April due to the ongoing coronavirus lockdown.