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Singapore — The Philippine domestic bioethanol reference price climbed 1.85% on a biweekly basis to Pesos 54.54/liter ($1,090.80/cu m) in the first half of December, data released Friday by the Sugar Regulatory Administration showed.

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The increase arrested three months of consecutive monthly drops in the domestic ethanol price in the Philippines.

The domestic bioethanol price had increased since the start of 2018 before hitting a speed bump in September.

On a year on year basis, the domestic ethanol reference price in H1 December was up 24.26%.

In the feedstock market, the price of Negros molasses in H1 December rose 2.68% from H2 November, to Peso 8,478/mt resulting in a higher equivalent feedstock cost of Peso 36.44/liter ($0.69/liter).

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"The increase in molasses price was due to easing of exports from Brazil, which stopped exporting at this time of the year," a trader said. "The molasses price is not expected to decrease until February when Chinese demand slackens due to the Lunar New Year celebration," he added.

Cost of the other feedstock, sugarcane, was at Pesos 28.09/liter ($0.53/liter) in H1 December, up 2.41% from H2 November. The equivalent price of sugarcane climbed due to the increase in sugar prices by the similar magnitude to Pesos 1,516.97/lkg, which is equivalent to $577.37mt.

Since the Tax Reform for Acceleration and Inclusion or TRAIN bill was passed from January 1, 2019, which introduced taxes on sweetened beverages, the Philippines had faced higher ethanol feedstock costs.

The TRAIN bill led to major beverage companies in the Philippines switching to high-fructose corn syrup with sugar in their production process as the bill imposed a Pesos 6/liter ($0.11/liter) tax on drinks containing calorific or non-calorific sweeteners, and a Pesos 12/liter tax ($0.23/liter) on drinks containing high-fructose corn syrup, or a combination of both.

In comparison, the average imported fuel ethanol price for first half of December was $423.39/cu m CIF Philippines, S&P Global Platts data showed, which was less than half of locally produced ethanol prices.

-- Donavan Lim, d.lim@spglobal.com

-- Edited by Norazlina Jumaat, newsdesk@spglobal.com