The Philippines domestic bioethanol reference price remained steady from the previous half-monthly cycle at Pesos 54.6/liter ($1,092/cu m) in the first half of October, but was up 12.6% year on year, data released Thursday by the Sugar Regulatory Administration showed.
In the feedstock market, Negros molasses firmed 2.98% to Pesos 8,091.08/mt in H1 October from H2 September, resulting in a higher equivalent feedstock cost of Pesos 34.86/liter.
The increase in molasses price was contrary to market expectations. "Molasses prices should fall since crushing just started in September," a Philippine trader said.
The equivalent cost of another feedstock, sugarcane, was Pesos 29.76/liter in H1 October, down 3.09% from H2 September. The price of sugarcane dropped due to the availability of cane at the beginning of the 2018-19 (September-October) season and the Philippines importing 200,000 mt of sugar for the first time in more than two years over July-August and intending to import another 300,000 mt before year end, market sources said.
In comparison, the average imported fuel ethanol price for H1 October was $433.64/cu m CIF Philippines, S&P Global Platts data showed. This equates to less than half the price of locally produced ethanol, even after including the 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 country's Department of Energy has set LMAs at 103,613 cu m for the fourth quarter. This is down 9.61% from 114,633 cu m for Q3, but a 50.71% spike from Q4 2017.
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.
