The Philippines' local monthly allocations of domestically produced ethanol have been confirmed at 76,900 cu m for the second quarter, trade sources said Tuesday.
This is 1,065 cu m higher than the first quarter, which stood at 75,835 cu m and 900 cu m lower from 77,800 cu m for the same period in 2016.
Domestic production in April is expected to reach 29,300 cu m, before dropping to 23,800 cu m/month in May and June.
The LMAs are determined quarterly by the Philippines' Sugar Regulatory Administration after consulting domestic distilleries that produce fuel-grade ethanol in the country.
In 2017, a new distillery with a 40 million liter/year capacity is expected to operate, bringing a total of 11 plants with an aggregate capacity of 322 million liters.
Oil companies in the Philippines are allocated a purchase quota proportionate to their market share in the retail gasoline market, and are required to fulfill the quota before turning to imported product to make up for the shortfall.
In terms of prices, the domestic ethanol price weakened for the fifth consecutive month in January to Peso 56.01/liter ($1.12/liter), hitting a 16-month low.
In comparison, prices in the US were supported by strong exports demand to Brazil especially. The average CIF Philippines fuel-grade ethanol marker in January was $499.85/cu m, S&P Global Platts data showed, which means the domestic Philippine ethanol price was 224% higher than the imported fuel-grade ethanol price in January.
The spread between the two had been narrowing since last September when the domestic price was around 251% higher than the imported price.
On the import front, most Philippine oil companies were covered for the first quarter. One major oil company issued a buy tender Monday, seeking 3,000 cu m for May delivery and 4,000 cu m for June delivery.
