Northeast Brazil H1 June gasoline supply to be tight: market sources

Brazilian gasoline market participants are expecting the first half of June to be relatively low in supply, as state-run Petrobras reduced deliveries via its monthly quotas, imports are largely expected for the second half of the month and inventories remain tight.

During the largest industry conference in Northeast Brazil, Bahia Oil & Gas Energy, held May 27-29, fuel distributors tried to secure additional volumes from Acelen, the country's main private refiner.

Spot trades became the next alternative, as it was clear Acelen could not immediately increase supply.

Limited availability in the Northeast led to high-premium trades, in comparison with state-led Petrobras' posted prices, being reported.

On May 29, for example, Platts, part of S&P Global Energy, heard at least 300 cubic meters changed hands at Real 2,100 above Petrobras' reference in Suape and an additional 300-cubic-meter batch was traded on June 2 at a Real 2,200 premium in Itaqui.

Petrobras and Acelen supply about 75% of the gasoline needs in the Northeast, according to company and market data. Some participants were requesting additional quotas with both and counting on at least Petrobras raising sales volumes, but there was reportedly a cut for June.

"People were queuing at Acelen's booth at the event," a mid-sized distributor said. "We all wanted to know if they can come with higher supply this month, due to this tightness."

At the same time, the market was bidding consistently below import levels, as retail prices have lagged greatly compared to wholesale prices. Therefore, there was seemingly not enough demand to make imports viable, limiting it in the region, a second mid-sized distributor said.

The start of June reveals significant vessel availability restrictions across all locations, with most cargo arrivals expected in the second half.

Those factors combined led to dwindling inventories and that rush to the spot market. It started normalizing June 3, although most market participants still reported low spot availability.

Platts assessed gasoline prices on an FCA basis in Suape at Real 3,807.60/cubic meter June 3, a Real 1,300 premium over the Petrobras ETM Ipojuca reference (after government subsidies). It stayed before that at Real 4,497.60/cubic meter May 29-June 2, a Real 1,990 premium and at record highs since first publication on March 31, 2025.

A regional Southeast distributor, on the other hand, said that the arbitrage remains closed and recent price movements have had a limited impact on import activity. The distributor noted that the perceived final effect of the subsidy on prices has helped mitigate market reactions, resulting in relatively stagnant activity.

Prices in the South-Southeast markets had been capped by that limited demand, although new trades emerged at the turn of the month — still at significantly lower levels than those seen in the Northeast. At least 1,500 cubic meters were traded in Santos since June 1 at Real 1,050-1,450 premiums to Petrobras, with 2,000 cubic meters moving in Paranagua at Real 1,150-1,200 premiums.