Singapore — The Philippines domestic bioethanol reference price dropped for the first time in 9 months to Pesos 55.49/liter ($1,109.80/cu m) in first-half September, from Pesos 58.15/liter in H2 August, data released on Monday by the Sugar Regulatory Administration showed.
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In Philippines, the last half-monthly drop in domestic bioethanol reference price was in H2 November 2017, the data showed.
However, the domestic ethanol reference price in H1 September is up 13.57% year on year.
In the feedstock market, Negros molasses fell 1.17% from H2 August to Peso 8,183.42/mt in H1 September, resulting in a lower equivalent feedstock cost of Peso 35.24/liter.
The equivalent cost of another feedstock, sugarcane, was at Pesos 31.16/liter in H1 September, down 13.66% from H2 August. The price of sugarcane dropped due to increased availability of cane in beginning of the 2018-19 (September-October) season and Philippines importing 200,000 mt of sugar for the first time in 2 years over July and August, market sources said.
The Philippines has been grappling with high domestic ethanol feedstock costs since the Tax Reform for Acceleration and Inclusion or TRAIN bill introduced taxes on sweetened beverages from January 1 this year.
The bill imposed a Pesos 6/liter ($0.12/liter) tax on drinks containing calorific or non-calorific sweeteners and a Pesos 12/liter tax on drinks containing high-fructose corn syrup, or a combination of both.
In response, major beverage companies in the Philippines opted to switch HFCS with sugar in their production process, industry sources said.
In comparison, the average imported fuel ethanol price for H1 September was $426.37/cu m CIF Philippines, S&P Global Platts data showed, which was less than half of locally produced ethanol prices even after including 1% import duty and 12% value added tax.
Oil companies in the Philippines are required to fulfill their local monthly allocations, or LMAs, before they can import cheaper fuel-grade ethanol.
The country's Department of Energy has set LMAs at 103,613 cu m for the fourth quarter of this year. This was 9.61% lower than 114,633 cu m for Q3, but a 50.71% spike compared with Q4 2017.
The Philippines' domestic bioethanol reference price is calculated by adding transportation costs to the average cost of the two major feed stocks for ethanol production -- molasses and sugarcane.
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