The Philippines domestic bioethanol reference price was Pesos 54.3/liter ($1,086/cu m) in the first half of November, down Pesos 0.11/liter from H2 October, data released Tuesday by the Sugar Regulatory Administration showed. The domestic ethanol reference price was, however, up 27.64% year on year.
Feedstock Negros molasses was up 1.39% from H2 October to Pesos 8,135.80/mt in H1 November, resulting in a higher equivalent feedstock cost of Pesos 35.04/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 28.98/liter in H1 November, down 2.36% from H2 October. The price of sugarcane dropped due to availability of cane in the beginning of the 2018-2019 (September-November) season and the Philippines importing 200,000 mt of sugar for the first time in over two years in July and August and another 300,000 mt before the year end, market sources said.
In comparison, the average imported fuel ethanol price in H1 November was $430.33/cu m CIF Philippines, S&P Global Platts data showed, which 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, down 9.61% from Q3 but up 50.71% from a year earlier.
The Philippines' domestic bioethanol reference price is calculated by adding transportation costs to the average cost of the two major feedstocks -- molasses and sugarcane.
