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Ulsan dips but Brazilian tax question marks linger

PRIMA’s spot Ulsan B-grade index dipped on Thursday to 545USD/m3, against a backdrop of softer Brazilian prices on Wednesday and a wide bid/offer spread in Asia on Thursday. Value in the Brazilian B-grade market sat at 470USD/m3 on Wednesday, also down 5USD/m3 on the previous session, with anhydrous priced considerably higher at 495USD/m3.

But the Brazilian Real remains volatile, amid a deteriorating domestic economic environment which is accentuating the government’s need to find new tax revenue streams and hiking the perception of political risk among Brazilian exporters and overseas importers. This is leaving Brazilian producers searching for higher risk premiums to sell their product. Sellers for the new harvest season in the FOB Santos B-grade market are showing offers for June next year at 420USD/m3, and FOB Santos anhydrous at 440USD/m3.

 

In the US on Wednesday the EIA reported a draw on ethanol stocks of 84,000bbl and a slight increase in production of 2,000bbl/d, implying firming ethanol demand. This clashed with a fall in implied gasoline demand on the back of falling gasoline production, although implied ethanol demand still sits below the ethanol blend wall of 10%. This saw US ethanol prices react by moving higher on Wednesday, although they still sit well below the higher Brazilian prices.

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