Brazilian hydrous ethanol sales in March totaled 1.48 billion liters, down 16.6% compared with February and 15.8% lower year on year, according to data from the Brazilian National Agency of Petroleum, Gas and Biofuel (ANP).
It was the third consecutive month that biofuel sales dropped in the country and most of this decline can be attributed to higher prices for consumers, which in March rose 8.34% year on year.
In March, the hydrous ethanol price for Brazilian consumers averaged Real 3.196/liter, compared with Real 2.95/liter in March 2019, while gasoline C – the Brazilian specification blended with 27% anhydrous ethanol – increased just 3.65% from Real 4.305/liter to Real 4.462/liter.
Using those figures, the price of hydrous ethanol surged to 71.63% of the price of gasoline in March from 68.52% in March 2019.
For consumers with flex-fuel vehicles, hydrous ethanol offers an economic advantage over gasoline when its price is 70% or less than that of gasoline because of its lower fuel economy.
Drivers who take the consumption decision based on the financial advantage changed their consumption pattern, since the E100 was above the 70% price threshold and the hydrous ethanol share in the Brazilian Otto Cycle demand softened from 28.3% in March 2019 to 27.7% in the most recent reporting month.
The Otto cycle is the combination of gasoline A, hydrous ethanol and anhydrous ethanol consumption.
Breaking down the figures by region, hydrous ethanol consumption in the southeastern states totaled 1.03 billion liters in March, down 15.15% year on year and 16.07% from February. The Southeast accounts for nearly 70% of total hydrous ethanol sales. In the southeastern states, the hydrous ethanol price was 69.9% of the price of gasoline in March, compared with 67.27% a year earlier.
However, in northern Brazil, where hydrous ethanol consumption is historically the lowest in the country, in March, it was the only region that saw a higher year-on-year volume. Biofuel sales in the north of Brazil totaled 18.2 million liters, up 16.03% year on year.
Hydrous ethanol is not a common choice for consumers in the region as it does not offer as much of a financial advantage over gasoline and it was no different in March. But the region is proving to be highly sensitive to any drop in the E100 price. A slight decline in the price parity to 82.15% in March from 83.45% in March 2019, saw an additional 3 million liters consumed. When looking at the whole of the first quarter of 2020, hydrous ethanol consumption surged 49% year on year.
