Brazil Sets Sights on China’s Ethanol Market, but High Volumes Unlikely
September 1, 2019
Commentary: Does Brazil’s Need For Ethanol Provide Greater Opportunities For US Farmers? (Freight Waves/Benzinga)
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Brazilian ethanol industry representatives were part of a trade mission organized by the Sao Paulo state government that visited China this month. The mission’s agenda included meetings with Chinese authorities and a visit to the headquarters of commodities trader COFCO, which owns four ethanol plants in Brazil.
Sao Paulo state is the largest ethanol producer in Brazil. The state’s agriculture secretary, Gustavo Junqueira, who went along on this month’s China visit, said the opening of China’s ethanol market was discussed.
In a statement, Junqueira added that he thought Sao Paulo mills could sharply increase deals but did not elaborate.
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Felipe Vicchiato, chief financial officer for Sao Martinho SA (SMTO3.SA), a large Brazilian ethanol producer, said Chinese officials seemed to be serious about the 10% ethanol plan during the talks.
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The Chinese government would most likely seek to balance ethanol use with local production, refraining from pushing for an immediate implementation of the E10 that would necessarily spur imports, the COFCO source added.
“There is also pressure from oil companies, so I don’t think it is going to happen,” he said, referring to implementation next year.
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If Chinese imports were to jump, Brazil would be in a good position in relation to the United States, the world’s biggest ethanol producer. China slapped a 25% additional tariff on imports of U.S. ethanol this year as part of the trade war between the world’s two largest economies. READ MORE
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