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Ethanol Prices Continue to Decline in the South American Market

Ethanol Prices Continue to Decline in the South American Market

  • 30-Jun-2022 9:06 AM
  • Journalist: Patrick Knight

Manaus, Brazil- Ethanol prices weakened in the previous week because enormous manufacturers and wholesalers were missing from the spot market leading to market dullness. Less inquiry about the product eventually pressured the suppliers to dip down the prices in the South American market. The Brazilian government brought the new ICMS charges. According to the new policy, the market prices dropped 18% to 25% in Sao Paulo. As a ripple effect, the market dynamics of Ethanol in the regional market tumbled approximately by 3%.

ICMS is a state charge imposed by the government on the flow of commodities and costs. This law also applies to fuels henceforth, showcasing its proportional effects on Ethanol prices in the Brazilian market. The ICMS charge covered at 17%-18% will build fuel's concern and seriousness over Ethanol in numerous local producers and consumers of Brazil and will eventually make ethanol costs fall close to the edge. Sugar prices have gloomed since the beginning of the political and military action between Russia and Ukraine. But, the prices of Ethanol in Brazil were the most extravagant state, raising government expenditures on gas and compelling the local producers to create not so much Ethanol but more sugar.

Major countries, including Brazil, seek to achieve the Ethanol blended fuel target, making it the priority among the end-users. Ethanol blended fuel becomes a sustainable and affordable option for the end-users. Furthermore, the decline in tax eventually reduces the prices of Ethanol. As fuel and hydrous Ethanol seek drivers' inclination at siphons, the decrease in the alleged ICMS charge on gas will probably slice Ethanol's enticement for vehicle proprietors, eventually driving factories to make not so much Ethanol but rather more sugar.

According to ChemAnalyst, the strategic steps taken by Brazil's government officials have precisely influenced the market dynamic of Ethanol. As a result, Ethanol prices deteriorated, and end consumers may continue to witness the same. Despite the increment in feedstock, corn, sugarcane, and wheat prices, Ethanol market dynamics in the regional market will remain on the lower edge.

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