The spot price of anhydrous ethanol in Brazil's North-Northeast region surged in the week that ended Friday, November 8, supported by stronger gasoline sales and lower availability of anhydrous in the region. The assessment moved up for the third consecutive week and was Real 165/cu m higher than in the same period of the prior year.
The movement was not typical considering that regional mills are at the peak of their crushing season, however, during this season most have been favoring hydrous ethanol production, resulting in a smaller availability of anhydrous in the spot market. Trades were widely reported out of Pernambuco and Alagoas state at Real 2,250/cu m, proving that the market was moving up during the week.
On Friday, offers were confirmed at Real 2,280/cu m ex-mill Pernambuco, while most regular participants were said to be out of the market, waiting for higher prices in the next week. A seller of imported ethanol from the US was still confirmed in the market Friday at Real 2,300/cu m, establishing a price ceiling to the DAP Suape bases.
There is a consensus that for early December many vessels are expected to start to arrive in Suape to discharge anhydrous from the US within the import quota, which means not paying the 20% import tariff, and depending on the arrival flow, this higher volume available in the regional market could start to cap the price.
According to S&P Global Platts calculations, anhydrous ethanol transferred by road from a mill in Ribeirao Preto to Suape port was valued at Real 2,600/cu m, up Real 20/cu m week on week. Platts assessed ex-mill Ribeirao Preto anhydrous ethanol at Real 2,200/cu m.
Platts valued imported anhydrous ethanol delivered CIF Suape, without the 20% import tariff, at Real 2,194/cu m, an increase of Real 58/cu m from last week, showing an open import arbitrage for producers with quota. The imported ethanol including the 20% import tariff, was valued at Real 2,617/cu m, proving a closed import arbitrage.