Arrival of Brazil ethanol cargos to boost ARA inventories on prompt
Europe: Brazilian ethanol shipments to Europe have resumed, easing ethanol prices, which Platts assessed at Eur739.50/cu m on July 4, down 1.8% week-on-week. European prices had climbed 24.2% since January due to high demand and low imports. April and May saw increased shipments from Brazil. Europe remains a net ethanol importer, with 2023 consumption at 8.749 million cu m versus production of 6.86 million cu m. Demand peaks in summer driving season.
Shipments of Brazilian ethanol have begun to arrive in Europe, according to market sources, as European prices have risen over the last six months following meager imports from the country since the fourth quarter of last year.
“Lots of US material came over the last few months, but Brazil has been additional over the last month or so,” a market participant said.
European ethanol prices have shown signs of easing with the arrival of cargoes. Platts, part of S&P Global Commodity Insights, assessed T2 ethanol FOB Rotterdam at Eur739.50/cu m on July 4, down 1.8% week on week. However, prices have been elevated since the start of the year, having climbed 24.2% since Jan. 2 in line with higher demand from Poland and a shortage of total imports through the first quarter.
“There was a big parcel last week again [to Rotterdam], namely Brazilian product from Argentina,” a source said. “As [ARA] received quite a lot of product last week, stocks are higher again, though activity is lower than in 2023.”
Exports of ethanol from Brazil to Europe started to pick up pace in the second quarter after a quiet first quarter, with April and May shipments amounting to 8.9 million liters and 10.3 million liters respectively, data from Comexstat showed. The volumes are a noticeable jump from just 110,800 liters and 48,024 liters exported to Europe in February and March, respectively.
Recent discussions indicated that the arbitrage with the US remains closed, while small volumes from Brazil were reported. “Some Brazilian material is still coming, but the arbitrage has not properly opened yet,” the same market source said.
Europe is a net importer of ethanol, with annual consumption consistently exceeding production capacity in the bloc. In 2023, EU production amounted to 6.86 million cu m, against consumption of 8.749 million cu m, with almost a quarter of demand covered by imports, Commodity Insights data showed.
On the demand side, market participants continued to report that buying interest tended to be strong, tracked also by ETBE interest from Mediterranean countries, as the peak summer driving season commenced.
