BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR PRIVACY & COOKIE NOTICE
X
Skip Navigation LinksHome|News & Analysis|Podcasts| Commodities Spotlight Podcasts

Commodities Spotlight Podcasts

Ethanol tariff sought by Unica may not slow Brazil's imports: market

April 11, 2017 (6:28 mins)



Unica, Brazil's sugar industry group, is seeking the reinstatement of an ethanol import tariff, citing greenhouse gas emissions from other producers and surging ethanol imports — especially from the US. Biofuels analyst Beatriz Pupo talks to US ethanol editor Josh Pedrick about how Brazil's ethanol imports have increased, particularly in some regions, and how it compares with actual ethanol consumption in the country. The idea of a tariff has also caught the attention of the market, including US exporters.


We welcome any feedback or suggestions for topics. Contact us at webeditor@platts.com.


Platts Email

Request a free trial of: Biofuelscan

Would you like to get a closer look at Platts Biofuelscan? Use the request a free trial link and we will send you 5 issues free for your review.

Biofuelscan covers the latest worldwide biofuels news and prices and provides a daily summary of market events. Also included are price assessments for ethanol, ETBE, renewal identification numbers (RINs), biofuels and closing market price assessments from the Americas, Europe, and Asia.

Request a trial More Information


Podcast Transcript



Ethanol tariff sought by Unica may not slow Brazil's imports: market


Josh: Hello, and welcome to The Commodities Spotlight podcast. My name is Josh Pedrick, US ethanol editor for Platts, and today I’m speaking with Beatriz Pupo, biofuels analyst also covering ethanol prices in Brazil. We are going to discuss the current plea from Unica for the implementation of an import tariff on ethanol in Brazil and its impacts to the market.


Bea, first, could you clarify the recent developments regarding Unica’s plead for the ethanol import tariff?


Bea: Hi Josh, sure. Unica is the Brazilian sugar industry group and they are seeking the introduction of an ethanol import tariff of 16%. The proposal was sent to the Brazilian Trade Chamber around last week and follows recent appeals from ethanol producers in the North-Northeast region for the government to consider reinstating a 20% import tariff on ethanol, which was temporarily suspended until 2019. The import tax was first suspended in October 2011 because Brazil was undergoing an ethanol shortage due to crop problems.


Josh: Right. And so what is actually triggering the request from Unica for the reinstatement of the tariff?


Bea: Well Josh, Unica is citing in its plea the higher greenhouse gas emissions of US corn ethanol, from which Brazilian imports have surged over the past year, arguing the imports will compromise targets under the C.O.P.2.1. agreement signed by Brazil in November.


Josh: Ah ok, so UNICA is claiming the increase in ethanol imports was significant enough that it is impacting the country’s GHG savings, is that right? Can you tell us a little more about that?


Bea: Of course. Last year, Brazilian imports of ethanol totaled almost 835 million liters or 220 million gallons a 63% year-on-year surge. With roughly 90% of the imports entering the country through North-Northeast ports. The estimates from Kingsman, the agricultural unit of S&P Global Platts, show that in 2017 imports from the US alone could make up 25% of the ethanol consumed in the NNE region, up from 15% in 2016.


Josh: That’s s a big increase indeed. I guess I can see why NNE producers were raising the question of reinstating the tariff in the first place.


Bea: Yes, right. However Josh I need to point that we look at the ethanol consumption country wide, the total of imports expected for 2017 would represent only 6% of it.


Josh: Interesting, so in the bigger picture, as a whole country the imports are only small compared to the total consumed in Brazil. Now, so far, what has happened with imports this year? What can we expect going forward?


Bea: The country's January-March imports have already totaled 721 million liters, compared with 143 million liters in the same period last year. In the last five months, Brazil imported 1 billion liters of ethanol, a record for the period. In March alone Brazil imported a record amount, 291 million liters, up 13% month on month and more than three times the 81 million liters imported in the same period a year ago, data from the secretariat of foreign trade showed Friday. Of this total, 72% entered in the country through Northeast ports, or 209 million liters. The balance, 82.5 million liters, entered through ports in the key sugar producing region, the Center-South region, the highest monthly volume since February 2012.


Josh: Ok a strong start to imports so far year this. How about the market, what are their reactions concerning the reinstatement of the import tariff?


Bea: The plea has definitely caught the attention of US exporters, who have eyed the increase in shipments to Brazil as an outlet that would have allowed them to switch the destination of volumes that would have gone to China before it re-imposed a 30% ethanol import tariff.

The Kingsman estimates are that Brazil should account for 39% of US exports in 2017, compared with 27% in 2016. Exports to China, by contrast, are expected to drop dramatically below 50 million liters, compared to over 600 million liters last year.

Some of the Brazilian players we speak to expect US ethanol imports to continue even if an import tariff is introduced, if there are no changes in the current supply and demand picture. As for the US, sources tell us that product still move to Brazil but massive volumes are set to be shipped prior to the imposition of any tariff, which is expected to take place by July 1.


Josh: Very interesting, thank you very much, Beatriz. I’m Josh Pedrik, and that will conclude this podcast. For more information about Platts Agriculture news and pricing, please visit platts.com.





Related News & Analysis

Videos archive Commodities Spotlight podcast archive News features

Related Products & Events

Biofuelscan See all Agriculture events

Copyright © 2017 S&P Global Platts, a division of S&P Global. All rights reserved.