2023-04-20 22:50:40
© Reuters. Refueling at a service station in São Paulo 03/14/2023 REUTERS/Paulo Whitaker
By Marta Nogueira and Roberto Samora
RIO DE JANEIRO/SAO PAULO (Reuters) – Lower biodiesel prices in Brazil are helping to hold down diesel prices at service stations in the country, which have already come under pressure from imports of the cheaper fuel, especially from Russia, according to analysts and an association of producers interviewed by Reuters.
With a record harvest in Brazil, industries are counting on lower prices of the main biofuel raw material, with reflections on biodiesel prices. At the same time, some producers are fighting for the market and sometimes reducing margins, according to an expert.
S-10 diesel, the most consumed fuel in the country, followed the downward trend this week, being priced at gas stations at an average of 6,232 reais/liter last Tuesday, according to a survey by Ticket Log. In the month, diesel fell 2% compared to the March average, while in the year the retreat is around 10%.
“Some factors influence this downward pressure on diesel prices. We observed that biodiesel reduced by around 35% from one year to now (April 2023 versus April 2022) and… this naturally impacts the mixture when analyzing the diesel B”, said the managing partner of Raion Consultoria, Eduardo Oliveira de Melo.
StoneX’s derivatives analyst, Pedro Shinzato, also commented that biodiesel is contributing to the reduction of diesel prices at the pumps, but stressed that the biggest impact is the imported product, which is on average cheaper than the price charged by Petrobras (BVMF:) in the refineries.
This also occurs, according to specialists, at a time when Brazil has increased imports of diesel from Russia, which has been exporting its product at lower prices in the face of sanctions from Europe, which in turn stopped buying Russian fuel due to the war in Ukraine.
The association of biodiesel producers Aprobio drew attention to a drop in the price of biofuel of more than 20% in the accumulated result for the year until the last 9th, which meant that there was “the possibility of a greater reduction in the value at the than the price drop exclusive to fossil diesel”.
In addition to the large soy crop, which accounts for around 70% of biodiesel raw material, the biofuel producing plants have idle capacity, said Shinzato, which contributes to lower fuel prices.
“The mills prepared themselves in the past for a greater mixture (of B15, compared to the current B12). The mills have idle capacity today, so it’s a game of who squeezes the margin more to win the market”, commented Shinzato.
The situation in which biodiesel contributes, together with imported diesel, to the reduction of values at the pump occurs at a time when Petrobras –which accounts for 70% of the national supply– has been holding back its prices.
According to StoneX, Petrobras would have room to reduce diesel in refineries by more than 50 real cents per liter, if it followed the calculations of the import parity consultancy. The last time the state-owned company changed the price of diesel was on March 23, when it reduced the value by 4.5%.
In regions in the interior of the country, farther from the Petrobras refineries, the effects of biodiesel on prices have been particularly noticeable.
“In the interior of the country, in a soy-producing region with biodiesel production capacity, biodiesel does have this effect (of keeping diesel prices under pressure)”, said Amance Boutin, fuel specialist at Argus, a data and consultancy.
Boutin also commented that “biodiesel is more economical in some producing regions”, where S10 A diesel (without a biodiesel blend) is the most expensive due to the distance from national refineries.
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