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Heavy Brazil rains stymie supply for the export market

Interest in the Ulsan B-grade market remained quiet on Tuesday, as rumours linger that smaller tender deals may occur towards the end of this week. Buyers are said to be looking for small lots of 1,000m3 – 3,000m3 for December arrival, although they could be forced to pay high premiums due to a lack of product, and considering the majority of ethanol due to arrive in Ulsan has already been pre-sold. PRIMA’s spot Ulsan B-grade index rose 5USD/m3 to 545USD/m3 on Tuesday, on the back of a hike in Brazilian ethanol prices.

Brazilian ethanol prices have been on the climb, with a severe lack of product in the B-grade market. With rains in the South Central region stumping sugarcane crushing for the next week, priority is being given to the domestic market, leaving a severe lack of product for the export market. Stability is beginning to be seen in the Brazilian Real, making exports of Brazilian ethanol more expensive, and late shipment loadings in Brazilian ports has stifled supply for the export market. This has seen anhydrous ethanol FOB Santos prices rise 5USD/m3 to 500USD/m3, and B-grade ethanol FOB Santos prices jump 15USD/m3 to 485USD/m3.

In the US, ethanol prices are also continuing to rise on the back of an upwards drive in prices in the corn markets. Fresh vessel shipment line-up data shows a 34,668m3 cargo of ethanol is currently on route from Houston to China. Two other shipments went from Brazil to Asia earlier in October, one of 18,500m3 capacity and the other 11,556m3.

 

NB 27/10/2015

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