Cepea, January 4, 2021 – Agents from the sugar-energy industry were optimistic in early 2020, expecting high ethanol consumption in the 2020/21 season and heartened by the Renovabio program. However, the season was marked by many uncertainties due to the covid-19 pandemic, which limited the demand for ethanol, pressing down quotes most of the year, despite the lower production of the biofuel.
Based on the monthly CEPEA/ESALQ Indexes for hydrous ethanol, the average in the 2020/21 season (up to November) was 1.8804 BRL per liter, against 2.1825 BRL/liter in the same period of the previous season, 13.8% down, in reals terms (values were deflated by the IGP-M from November/2020). The Index for anhydrous ethanol averaged 2.0637 BRL/liter, 13.8% down in the same comparison, in real terms.
On the other hand, according to data from Unica (Brazilian Sugarcane Industry Association), ethanol production totaled 28.9 billion liters in the 2020/21 season (up to the end of November), 9% down compared to that in the same period of the previous season.
In March, the covid-19 pandemic increased in the world, sharply pressing down oil quotes. In Brazil, social distancing measures in late March forced the sugar-energy sector to adjust to the new scenario. Thus, the production mix at mills, which had been previously stablished, was changed, and higher volumes of sugarcane were allocated to sugar production instead of ethanol production.
In April and May, the demand for ethanol for alcohol gel and other cleaning products increased sharply, reducing high inventories at plants. Besides, with the dollar favoring exports and the firm international demand for ethanol for other purposes, plants exported high volumes in 2020.
The year was also marked by the drought, which resulted in only a few interruptions of sugarcane crushing at mills. Some plants anticipated the end of the crop, and, at some specific moments, ethanol supply increased sharply due to the need of making room in storage tanks, primarily for hydrous ethanol.
Data from Cepea show that, despite the gradual resume of the demand for hydrous ethanol, the volume sold in São Paulo State between April and November was 29.62% lower than that in the same period of the previous season. As regards anhydrous ethanol, the volume sold in the spot market increased by 27.37%, reflecting the decrease in the percentage of contracts demanded by the ANP (National Agency of Petroleum, Natural Gas and Biofuels).
This season (from April to November 2020), hydrous ethanol sales (to both the domestic and the international markets) by the plants in central-southern Brazil totaled 13.78 billion liters, 17.79% down from that in the same period of 2019 (16.23 billion liters), according to data from Unica.