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Ethanol Production Slows Down in South America Region

Ethanol Production Slows Down in South America Region

  • 03-Jun-2022 3:56 PM
  • Journalist: Jacob Kutchner

Manaus, Brazil- The government of Brazil has dropped the sugar export agreement and redirected production to Ethanol to capitalize on high energy costs, as indicated by individuals with direct information on the arrangements, raising worries of a sugar lack. Ethanol prices in the regional market are directly impacted, and escalation in the prices is witnessed in the South American market. This escalation occurred due to the manufacturers' tight feed supply, leading to high production costs.

UNICA, the Brazilian sugarcane industry affiliation, has delivered information revealing that this week sugarcane handling, ethanol production, and ethanol marketing were all down. According to the data, the drop in the production occurred due to the feed; sugarcane processing is down after the harvesting season leading to constrained supply with the downstream manufacturers. Consequently, the prices of Ethanol climbed during this week in the Brazilian market. Ethanol producers have been receiving strong demand from perfumes and cosmetics sectors, becoming the driving force for price escalation. These facets have proportionally affected the market dynamics of Ethanol, resulting in a hike in the retail prices of the same in the market in Brazil.

As per the resources, the elevation in the price of gasoline and its consumption created a competitive field as Ethanol is being used for biofuel production. The rising concern about the environment and decreasing the dependency on petrol have pressurized the government officials to burgeon the production of Ethanol. Hence to fulfill the demand from pharmaceutical, personal care, and cosmetic sectors, manufacturers have to increase the operational rate of Ethanol, consequently impacting the prices of Ethanol in the regional market.

According to ChemAnalyst, "Ethanol market dynamics will remain buoyant in the South American region due to the turmoil in feedstock prices." Strong demand from downstream sectors will keep the market sentiments in a positive direction, proportionally impacting the prices of Ethanol.

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