A vote by Brazilian foreign trade board Camex to reinstate the country's ethanol-import tariff has been postponed until June, market sources said Thursday.
The vote was scheduled to take place on Wednesday during a meeting of several government ministries and Camex.
The import tax was suspended in October 2011 because Brazil was undergoing an ethanol shortage due to crop problems. The tariff is currently suspended until 2019.
Amid surging imports throughout 2016 and early 2017, two different fronts have been asking for the return of the import tax.
Brazilian sugar industry group Unica is seeking the introduction of an ethanol import tariff of 16%, citing higher greenhouse gas emissions of corn ethanol, and arguing the imports will compromise emissions targets under the COP21 agreement signed by Brazil in November.
In addition, North-Northeast ethanol producers are asking for the return of the tax at 20%. The vast majority of ethanol imports enters through the region.
The imports are usually via ports located in Paraiba and Maranhao states, where no local tax applies to imported ethanol.
Brazil's agricultural sector has opposed the tariff, with the farmers' group Brazilian Rural Society arguing it could lead to retaliatory tariffs from the United States on other commodities.
SUPPLY AND DEMAND PICTURE
The North-Northeast region has a structural deficit of anhydrous ethanol, as its local production represents roughly 40% of local fuel and industrial consumption.
In 2016, local anhydrous production represented only 30% of local demand. In the first quarter of the year, anhydrous consumption, which is blended with gasoline at a 27% rate, rose 4% on the year to 792.3 million liters, data from the National Petroleum Agency (ANP) showed.
For 2017, Kingsman, an agricultural unit of S&P Global Platts, has estimated that anhydrous ethanol fuel consumption will reach 3.23 billion liters, up 2% on the year.
Imports of ethanol into the region in 2017 could make up 37% of the ethanol consumed in the North-Northeast, up from 15% in 2016, Kingsman estimates show.
