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Chemical News & Intelligence
February 5, 2014 Wednesday
Brazil to increase ethanol production, decrease US imports - analyst
CAMPINAS, Brazil (ICIS)--Brazil likely will not continue importing corn-based ethanol from the US in upcoming years due to expanded domestic production, an analyst said on Tuesday.
According to Mauricio Lima Muruci, market analyst at Safras, Brazil is expected to expand its raw materials production.
"The expanding of the volume of supply will guarantee competitive prices," he said.
"Besides this, there's an administration policy [regarding fuel] prices which guarantees in the Brazilian market the maintenance of the current price levels," the analyst said.
Currently, Brazil's imports of US ethanol occur in very a specific period - between December and April, during the country's sugarcane off-season, Muruci said.
Muruci comments follow the Brazilian government's recent reduction to zero of the PIS and Cofins taxes for ethanol imports. The measure is valid until 31 December 2016.
Recently, Marco Antonio Almeida, natural gas and oil secretary at Brazil's mines and energy ministry, said Brazil should export about 2.5bn litres (661m gals) of ethanol to the US and may import between 180 and 250m litres of the fuel within the 2013-2014 sugarcane harvest.
"These imports are understood as punctual opportunities to take advantage of prices, particularly due to the start of the [sugarcane] off-season in the centre-south region," he said, adding that the region tends to have low price hikes within this period.
"Within this scenario of balance of exports and imports, I can't see any harm resulting from punctual imports," Almeida said.
Despite Muruci's and Almeida's comments, Brazil's sugar and ethanol association Sindacucar argues that imports of US ethanol to Brazil's northeast may harm the region's competitiveness.
"The complement of this region in supply comes, traditionally, from Goias, Mato Grosso, among other [states]. ... We don't need to import ethanol. It's unnecessary and opens a serious precedent," an executive recently said.
According to Muruci, maritime agencies forecast Brazil will receive at least one vessel with about 12m litres of the corn-based ethanol every 30 days during the first two quarters of 2014.
"In total, there is the confirmation that [Brazil] has contracted a volume from [60m-80m] litres of ethanol from the US," he said.
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