Singapore — The Philippines domestic bioethanol reference price dropped 5.23% on the month to Pesos 55.07/liter, which is equivalent to $1,101.40/cu m, in September, data released Tuesday by the Sugar Regulatory Administration showed.
This was the first monthly drop in domestic ethanol prices in over nine months, the data showed. Domestic ethanol prices last dropped in November 2017, when it fell 10.61% on the month to Pesos 42.48/liter.
The domestic ethanol reference price in September is, however, up 12.92% year on year.
In the feedstock market, Negros molasses fell 2.87% from August to Pesos 8,020/mt in September, resulting in a lower equivalent feedstock cost of Pesos 34.57/liter.
The equivalent cost of another feedstock, sugarcane, was Pesos 30.98/liter in September, down 14.23% from August. Sugar prices also fell to Pesos 1,674.70/kg, which is about $820/mt, in September after the country imported 300,000 mt in July and August, the first time in over two years. To tackle high sugar prices, the SRA in September allowed another 150,000 mt of sugar to be imported by the end of the year.
The Philippines has been grappling with high domestic ethanol feedstock costs since the Tax Reform for Acceleration and Inclusion bill introduced taxes on sweetened beverages from January 1.
The bill imposed a Pesos 6/liter (12 cents/liter) tax on drinks containing calorific or non-calorific sweeteners and a Pesos 12/liter tax on those containing high-fructose corn syrup, or a combination of both.
So, major beverage companies in the Philippines switched to sugar, industry sources said.
In comparison, the average imported fuel ethanol price in September was $426.65/cu m CIF Philippines, S&P Global Platts data showed. This was less than half that of locally produced ethanol even after including a 1% import duty and 12% value added tax.
Oil companies in the Philippines are required to fulfill their local monthly allocations, or LMAs, before they can import cheaper fuel-grade ethanol.
The Department of Energy has set LMAs at 103,613 cu m for the fourth quarter. This was down 9.61% from Q3, but up 50.71% on the year.
The Philippines' domestic bioethanol reference price is calculated by adding transportation costs to the average cost of the two major feedstocks for ethanol production -- molasses and sugarcane.
