Argentina hikes biodiesel, ethanol prices for first time since October – S&P Global

Highlights

Hikes to be gradual through May

Biodiesel to rise by a total of 91%

Ethanol will jump 56% over the same period

Buenos Aires — Argentina’s Energy Secretariat said it has authorized a gradual 91% increase in biodiesel prices and 56% in the price for ethanol for oil refiners to mix into diesel and gasoline over the next few months, the first hike since October.

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The hikes are already raising pump prices, a key source of revenue for investment in the oil sector.

The price of biodiesel, which, in Argentina, is made from soy oil, jumped an initial 59.3% to Peso 77,300/mt ($911.64) in January from Peso 48,533/mt in October-December 2020, the secretariat said in a resolution published late Jan. 4.

The price of biodiesel will then rise to Peso 86,875/mt in February, Peso 89,975/mt in March, Peso 90,300/mt in April, and Peso 92,558/mt in May for a total hike of 90.7% from last October.

In a bid to limit the impact of the hikes on diesel pump prices, the resolution scales back the required 10% mix. Refiners will only have to mix 5% in January, half of the previous requirement. The mix will increase to 6.75% in February and 8.4% in March before returning to 10% in April.

The price of ethanol made from sugarcane will rise 33% to Peso 43.6/liter in January from Peso 32.78/liter in October, according to the resolution.

The price will then rise to Peso 47.80/liter in February, Peso 48.70/liter in March, Peso 49.60/liter in April, and Peso 51.132/liter in May — up 56% from the October-to-December period a year ago.

No mention was made about corn ethanol prices or any changes in the required 12% ethanol blend in gasoline.

Argentina is one of the world’s biggest biodiesel producers, with 4.5 million mt/year of installed capacity, but production slumped in 2020 as a March-November lockdown for the coronavirus pandemic reduced domestic consumption of diesel and a global economic slowdown has cut exports. Ethanol production has taken a hit from the lockdown.

The hike in the biofuel prices has already led state-backed YPF, the country’s biggest refiner with a 55% share of diesel and gasoline sales, to raise its prices 2.9%, effective Jan 5.

YPF relies heavily on diesel and gasoline sales to fund its upstream operations.

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