Brazil Increases Ethanol Export as Domestic Demand Declines
- 10-Oct-2022 4:44 PM
- Journalist: Motoki Sasaki
Brazil- The domestic demand for Ethanol in the Brazilian market is declining as the country focuses more on producing sugar than Ethanol for biofuel production. Ethanol market prices also declined as suppliers did not observe much inquiry about the product, which showcased less interest of the end users towards the Ethanol derivatives. According to the market participants, the demand for the product from the international market was firm in contrast with the domestic market.
According to UNICA data, sugarcane production in Brazil rose by 2.5% compared to the previous year. Significantly, sugar and Ethanol production followed the northward pathway in the Brazilian market. The commodity inflation rate in the country is declining slightly, easing the commodity prices that are sugarcane, proportionally impacting the production cost of Ethanol in the domestic market. According to the market participants, inflation and high demand for sugar as a food source have pressured the major sugar mill owners to lessen Ethanol production and focus more on sugar production. Moreover, the demand for biofuel also remained slow as the end users are focused more on food sources.
Brazil mainly exports Ethanol to South Korea and major European countries such as the Netherlands. Total Ethanol export to these countries accounted for nearly 60% of the Brazilian market. Other Asian and African countries also showed equal interest in the product and imported nearly 25% of the total Ethanol from Brazil. The Brazilian government has recently cut the fuel tax and paid attention to sugar production.
As per ChemAnalyst, the market prices of Ethanol in the Brazilian market are likely to follow the southward momentum in the upcoming weeks because of low demand and stabilized sugar production. Brazilian mills, seeking higher returns, used sugarcane to produce sugar rather than Ethanol, resulting in reduced supplies of biofuel and higher prices.