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Price Assessment

Platts NNE Brazil Anhydrous Ethanol Price Assessment

  • What is NNE Brazil anhydrous ethanol?
  • How do we assess NNE Brazil anhydrous ethanol?
  • Weekly Assessment Commentary
  • Weekly Assessment Rationale
  • Market price heards

What is NNE Brazil anhydrous ethanol?

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Platts NNE Brazil anhydrous ethanol assessment the weekly price benchmark for physical ethanol delivered into Suape, Pernambuco, in northern Brazil.

The assessment reflects anhydrous ethanol Delivered at Place in Suape and takes into consideration ethanol produced regionally, imported from the Center-South region as well as volumes delivered from international locations.

How do we assess NNE Brazil anhydrous ethanol?

The NNE Brazil Anhydrous assessment reflects the weekly tradeable value of a spot anhydrous ethanol at Suape 1-15 days forward from the date of publication, based on trades, bids, offers and indications of tradeable value reported to S&P Global Platts pricing specialists.

Platts editors engage directly with producers, consumers, traders, brokers, and shippers to gather price information. Platts publishes this information and uses it to assess values. The information gathered through market surveys is considered in the final assessment.

These inputs are published throughout the day, in real-time, in the form of "market heards", to allow Platts to test the information, which forms the basis of the assessment and for market participants to give feedback on those inputs.

The assessment reflects a minimum volume 250,000 liters, or 250 m3, maximum volume 1,000,000 liters, or 1,000 m3. Other volumes may also be considered but in relation to the assessed volume range. Platts considers standard payment terms, such as payment within 10 days of delivery.

Weekly Assessment Commentary

Spot anhydrous ethanol in Brazil's North-Northeast region was unchanged week on week.

There continues to be very little movement of ethanol flowing from different parts of Brazil to the North-Northeast region because the arbs are closed. The arb is closed for cabotage or vessels of ethanol originating from ports in the South and Center-South of Brazil moving to the North-Northeast and the arb is closed for moving trucks of ethanol from different inland parts of Brazil to the North Northeast.

The most notable news of the week was that Brazilian ethanol imports in November totaled 47.9 million liters, down 42% from October and also 56% lower year on year, showed latest data from Secretariat of Foreign Trade. Interestingly, the majority of the volume entered via the Center-South ports instead of the North-Northeast (51.2% of the total volume or 24.6 million liters).

Primary reasons for the lower imports in November were because of a change in legislation to the import quota system, trading restrictions during the start of the North-Northeast harvest, a weaker Brazilian real versus the US dollar, and higher ethanol prices in the US.

The Brazilian Foreign Trade Chamber, or Camex, published a new set of rules for ethanol import quotas in late October. The new rules alter the periods in which tariff-free ethanol quotas are allowed to enter the country and restricts imports to producers only.These changes caused importers holding quotas to pause and reassess these new regulations before starting to import ethanol again.

Although November marked a month of an extreme devaluation in the Brazilian real versus the US dollar, market participants are preparing for the possibility of a near term Petrobras price decrease of gasoline at refineries. The Brazilian Real has strengthened 2.7% against the US dollar to Real 4.1435/$1 from Real 4.2562/$1 during the last 10 days. NYMEX RBOB January futures have decreased 1.75% during the same time period. Petrobras utilizes a fuel pricing policy, which include energy and foreign exchange components to ensure Brazilian domestic prices are in line with international markets.

If the Brazilian Real continues to strengthen against the US Dollar and NYMEX RBOB January futures continue to decrease, than the Petrobras average gasoline price for distributors will most probably decrease thus putting downward pressure on ethanol prices in the near-term because of an increase in consumer demand for gasoline over ethanol.

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 2,735/cu m, unchanged week on week. Platts assessed ex-mill Ribeirao Preto anhydrous ethanol at Real 2,335/cu m or a 8.53% premium to hydrous ethanol net of the ICMS tax. Platts valued imported anhydrous ethanol delivered CIF Suape, without the 20% import tariff, at Real 2,143/cu m, a decrease of Real 153/cu m week on week, leaving the import arbitrage open by Real 172/cu m for companies with an import quota. If the 20% import tariff was included, the CIF value would spike to Real 2,557/cu m, closing the import arbitrage by approximately Real 242/cu m.

Weekly Assessment Rationale

DAP Suape anhydrous ethanol for 1-15 days forward from date of publication was assessed at Real 2,315/cu m Friday, unchanged week on week.

The assessment considered offers heard for DAP Suape at Real 2,320/cu m. There were no bids reported. A 1,500 cu m trade was reported on Friday at Real 2,310/cu m ex-mill Pernambuco, with a follow-up offer of Real 2,300/cu m. S&P Global Platts considered a freight rate of Real 40/cu m for transportation from Pernambuco to Suape port. A trade was reported on Friday for 630 cu m at Real 2,290/cu m ex-mill Alagoas, with a follow-up offer of Real 2,300/cu m. Platts considered a freight rate of Real 65/cu mfor transportation from Alagoas to Suape port. Although these traded values in Penambuco and Alagoas would imply a higher value in Suape, the offer heard for DAP Suape at Real 2,320/cu m kept the assessment unchanged week on week.

Market price heards

Delivery time: 1-15 days forward

Heards published on December 6

Quality Indication / Volume Price Location

Anhydrous

Offer

Real 2,300/cu m

ex-mill Alagoas

Anhydrous

Offer

Real 2,300/cu m

ex-mill Pernambuco

Anhydrous

Offer

Real 2,320/cu m

DAP Suape

Anhydrous

Offer

Real 2,320/cu m

ex-mill Pernambuco

Anhydrous

Offer

Real 2,350/cu m

ex-mill Pernambuco

Anhydrous

Traded (630 cu m)

Real 2,290/cu m

ex-mill Alagoas

Anhydrous

Traded (1,500 cu m)

Real 2,310/cu m

ex-mill Pernambuco

Hydrous

Traded

Real 1,800/cu m

ex-mill Paraiba

Hydrous

Traded

Real 1,800/cu m

ex-mill Pernambuco

Hydrous

Traded (250 cu m)

Real 1,800/cu m

ex-mill Pernambuco

Hydrous

Traded (1,000 cu m)

Real 1,800/cu m

ex-mill Pernambuco

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