June ethanol share in light fuel at 43%
Otto cycle demand slightly behind pre-pandemic level
Lower E100 adoption to increase CO2 emissions
Brazilian otto cycle demand, in gasoline C equivalent, had an ethanol share of 43% in June, down from 45.7% in the year-ago month and was at its lowest biofuel ratio since April 2018, Brazilian National Agency of Petroleum, Gas and Biofuel data shows.
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Otto cycle is the combination of light fuel demand — gasoline, anhydrous and hydrous ethanol — converted to the same energy content. Therefore, gasoline is converted to 70% of the total volume sold.
Of the total Brazilian light fuel fleet, nearly 80% is flex-fuel, meaning that drivers can fill their tanks with E100 or gasoline, which in Brazil has a 27% mandatory blend of anhydrous ethanol, the highest global biofuel blend in a fossil fuel.
Hydrous ethanol sales in June was at 1.27 billion liters, down 4.3% on year and a plunge of 26.1% from 2019 in the pre-pandemic environment. The E100 consumption drop was not a surprise for market participants, considering the E100 price spike for since mid-May.
S&P Global Platts assessed hydrous ethanol ex-mill Ribeirao Preto in June at an average of Real 3,517/cu m, a lift of 74% on year, while the average price for Southeast consumers was at Real 4,288/cu m, up 68%, according to agency, or ANP, data.
Brazil’s Southeast accounted for nearly 70% of the country’s hydrous sales in June.
While E100 demand was capped by the higher cost, fossil fuel gasoline sales increased 17.4% on year to 3.19 billion liters, a volume 8.1% higher than in June 2019.
In that scenario, the Brazilian total otto cycle demand in June was at 4.09 billion liters, up 11.9% on year and slightly behind the 4.16 from June 2019, confirming that as the vaccination speeds up in the country, the fuel demand tend to recover to pre pandemic levels.
Biofuel as a cap to emissions
Brazil is recognized for it wide adoption of the biofuel consumption and the positive environmental impact attributed to it.
In 2020, Brazil’s total ethanol share in the otto cycle demand, in gasoline C equivalent, was at 47% a high contribution to the country reduce the carbon emissions from the transport sector
In 2019, Brazilian CO2 emissions from the transport sector was at 196.5 million mt and from that total passenger vehicles accounted for 31% of the greenhouse gas emissions, according to the Greenhouse Gas Emission and Removal Estimating System.
Hydrous ethanol production has been hampered due to the drop of sugarcane production, which was widely affected by the severe dry weather hitting the country since 2020.
Since the beginning of the Center-South crop season 2021-22 on April 1 to July 15, hydrous ethanol production totaled 7.4 billion liters, a drop of 13.75% on year, while producers have been optimizing the anhydrous production which reached 4.3 billion liters in the same period, up 23.25% to guarantee the supply for the 27% blend in the gasoline.
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