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Lack of B-grade continues to stump spot market

PRIMA’s spot Ulsan B-grade index sat at 545USD/m3 on Wednesday, with action in the spot market still short due to a lack of product. One of the large Brazilian ethanol producers sold 10,000m3 last week, leaving them almost completely dry for B-grade for the time being. This lack of movement in the spot market has left Brazilian spot ethanol prices unchanged, sitting at 500USD/m3 and 485USD/m3 for anhydrous and B-grade respectively.

Fresh ANP data for Brazilian ethanol and gasoline consumption showed domestic hydrous ethanol sales sat at 1,631,072m3 for September, up 4% MoM and 48% YoY. This leaves total domestic hydrous ethanol sales for 2015 so far sitting at 13,140,122m3, with sales for the entire year of 2014 sitting at 12,994,115m3. Domestic gasoline sales for September rose 1% MoM but are still 12% lower than September 2014 levels. EIA numbers showed a considerable draw from US ethanol stocks, the largest seen since early August, with the increase in production of 7Mbbl/d coming in lower than expected.

Ethanol demand is sitting at its second highest level this year, and above the 10% blending wall with gasoline. This would imply that exports of US ethanol have been considerably higher this week than weeks previous. These strong EIA numbers indicate a price supportive environment, which would make US ethanol slightly less appealing to the international markets.

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