UPDATE 1-Brazil Aims to Announce Help for Ethanol Sector This Week -Minister
by Ana Mano and Roberto Samora (Reuters) Brazil plans to announce this week measures to support its ethanol sector, which has been battered by falling demand and a sharp drop in gasoline prices due to turmoil in oil markets, Agriculture Minister Tereza Cristina Dias said on Monday.
Dias said Brazil was finalizing measures that may include a rise in the Cide tax on gasoline and the withdrawal of the Pis/Cofins levy on ethanol for an unspecified period of time.
She said there is “consensus” on the Pis/Cofins withdrawal, while other initiatives were still being discussed within the mines and energy and economy ministries.
Plínio Nastari, head of agribusiness consultancy Datagro, welcomed the prospect of government support.
He said the industry uses proceeds from the sale of ethanol as working capital during the sugarcane harvesting season. Average ethanol prices at mills fell to 1.38 real per liter from 2.16 reais per liter last month, when the COVID-19 epidemic had not yet affected the market.
Dias said the government is aware demand for ethanol fell as a result of isolation measures to counter the spread of the novel coronavirus, citing as well a recent spat between Saudi Arabia and Russia on the size of oil production cuts.
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The government is also mulling ways to finance the stocking of ethanol, she said during an industry-sponsored webinar, mentioning ongoing talks with the Brazilian development bank BNDES.
“The government cannot permit that this sector suffers losses,” Dias said. “In times like this we need the state.” READ MORE
Brazil sugar production up 42% as season kicks off, ethanol sales down (Reuters)
UNICA asks government to help prevent ethanol industry collapse (Ethanol Producer Magazine)
Ethanol demand slump puts Brazil sugar industry in a grind (Reuters)
Brazilian hydrous ethanol trades at discount to production cost (S&P Global Platts)
Excerpt from Ethanol Producer Magazine: A statement released by UNICA notes ethanol has been one of the products most impacted by the pandemic. The fuel is being sold below its cost value. “If this continues, mills will be forced to interrupt the harvest that has just begun,” UNICA said in a statement, noting the entire supply chain will be impacted, from sugarcane producers to fuel suppliers. “There are 370 mills and distilleries, 70,000 sugar cane suppliers, for a total of 2.3 million direct and indirect jobs that are under imminent threat,” UNICA said.
Additional information is available on the UNICA website. READ MORE