Singapore — The Philippines' Department of Energy has set its local monthly allocation, or LMA, for ethanol at 88,800 cu m for the fourth quarter of 2019, down 2.52% from Q3, market sources said on Thursday.
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The Q4 LMA comprises 27,100 cu m for October, 31,000 cu m for November and 30,700 cu m for December, the Department of Energy document showed.
In total, 370,550 cu m was allocated for 2019, close to 2018 allocation of 367,686 cu m.
The LMAs are determined every quarter by the Sugar Regulatory Administration after consulting all domestic distilleries that produce fuel-grade ethanol in the Philippines.
Oil companies in the Southeast Asian country are allocated a purchase quota proportionate to their market share in the retail gasoline market, and are required to fulfil the quota before turning to imported product to make up for the shortfall.
Philippines domestic bioethanol reference price touched Peso 59.74/liter ($1,170/cu m) in June 2019, versus Peso 57.74/liter in June 2018, latest data from the SRA showed. A shortage of molasses in the Philippines have supported the cost of domestic ethanol, sources said.
In comparison, despite a recent spike in US ethanol prices, the average imported fuel ethanol price for June was $525.08/cu m CIF Philippines, S&P Global Platts data showed, which was around a half of locally-produced ethanol prices.
But even with lower imported prices, many participants were waiting for US ethanol prices to drift lower or to fulfil their LMA requirements first before turning to imported ethanol.
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