Sao Paulo — Brazilian ethanol imports were stable in February with 163.3 million liters entering the country, down 1% month on month, Secretariat of Foreign Trade (SECEX) data showed Tuesday.
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The volume is also down 37% from the year-ago month, the data showed.
Cumulative imports in 2018 stand at 327.9 million liters, down 24% from a year ago.
A flurry of imports in the first half of 2017 caused prices to plunge right at the peak of the intercrop season.
The volume imported in February this year is still considered strong and reflects the plunge in US ethanol prices to their lowest level since 2005 and higher domestic prices in Brazil as the key Center-South region entered its intercrop season. This allowed the arbitrage window to open despite Brazil's recently imposed tariff of 20% on quarterly volumes greater than 150 million liters.
However, the situation has changed in the past year, as the volume of imports did not translate into lower prices, given the tightness of stocks in the intercrop season.
Larger volumes are expected to enter the market in March, considering there were delays in shipping product out of the US in late January and early February because extremely cold weather caused logistics problems for barges on the Mississippi River. There was also a shortage of product due to high demand from China.
A large Brazilian trading company estimated the total volume of anhydrous ethanol imported from the US in the first quarter of 2018 might reach 712,000 cu m, with 270,000 cu m arriving through the Center-South ports and the balance -- 442,000 cu m -- through North-Northeast ports.
Estimates from S&P Global Analytics point to Brazilian imports from the US of 650,000 cu m in Q1, split between 250,000 cu m in the Center-South and 400,000 cu m into the North-Northeast.
After Q1 ends, imports from US were expected by a source to drop to 120,000-140,000 cu m per month.
According to Platts assessments of the Suape delivered ethanol price, the import arbitrage has appeared to be open -- even with the 20% tariff -- since early December. Platts started publishing weekly prices for ethanol in Northeast Brazil on November 10, 2017.
Brazil is expected to remain a net importer of ethanol in 2018, given stagnant production rates due to a lower sugarcane crop forecast for the coming season.
Platts Analytics estimates a Brazilian sugarcane crop of 584 million mt in 2018-19, down from 594 million mt in 2017-18, due to the aging of the cane fields and lower productivity, with an ATR estimated at 134 kg/mt.
However, due to the record premium for ethanol prices compared with sugar, a larger percentage of the cane crush is expected to be directed to ethanol at 58%, compared with 53.4% in the current season. This should translate to a total of 26.6 billion liters, up 5% year on year.
Total imports in 2018 should reach around 1.7 billion liters, Platts Analytics estimates, down 7% from 2017, but still the second-highest volume of ethanol to be imported in the country.