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Quota row puts Brazil ethanol sector on alert

  • : Biofuels
  • 20/09/08

Ethanol producers are considering whether to appeal to Brazil's congress should president Jair Bolsonaro's decide to reinstate a tariff exemption for US ethanol imports without providing better access to the US sugar market.

Bolsonaro has still not communicated the executive branch's position on the preferential no-tariff regime for up to 750mn litre/year of ethanol imports, which officially expired on 31 August, leaving US ethanol shipments subject to a 20pc common import tariff. A senior government official confirmed to Argus that there has been no final decision on whether to reinstate the lapsed quota.

If the duty-free quota is reestablished without reciprocation for Brazilian sugar exports to the US, producers could petition the president of Brazil's congress for a legislative decree reversing the decision of the executive, Brazilian producers told Argus.

The 746.9mn l of ethanol imported in the first seven months of this year was just shy of the quota limit, but down 19pc compared with the same period of 2019, according to data from Brazil's trade ministry MDIC. US ethanol exports accounted for 89pc of the total imported so far in 2020.

Brazilians want access to US sugar market

Brazilian ethanol producers celebrated their last agreement in 2019, but soured on the plan after the expected opening of the US market for Brazil's sugar exports failed to materialize.

Brazilian ethanol producers, mainly in the northeast region, have pushed for an end to the regime in recent months and remain opposed to a reinstatement of the tax benefits.

"Brazil is self-sufficient in ethanol and we are against the introduction of a new term for the quotas to be in force," Alexandre Lima, president of the Brazilian federation of cane planters Feplana, told Argus.

Absent a new decision on the future of the tariff regime, all ethanol imported after 1 September from countries outside the Mercosur trade bloc are subject to import duties of 20pc. Mercosur includes Argentina, Brazil, Paraguay, and Uruguay.

The asymmetry between the sugar sectors in Brazil and the US has made it difficult for Brazilian producers to successfully target counterparts in the US and negotiate lower import duties for Brazil's sugar, which can reach 140pc. Unlike Brazil, where ethanol producers are also responsible for the country's sugar output, US production involves multiple segments of the agriculture sector besides corn ethanol producers, such as sugar beet and sugarcane producers.

"Quota regimes generate distortions in the functioning of the market," Adriano Pires, founding director of the Brazilian center for infrastructure (CBIE), told Argus.

For Pires, maintaining the regime does not make sense, especially absent reciprocity from the US. "There are other possibilities, such as increasing corn ethanol production" in Brazil, he said.

Brazil/US relations supersede trade dispute

Yet the Brazilian government sees the quotas as part of a broader strategy in improving bilateral relations with the US administration, as both presidents are aligned politically and ideologically.

The import exemption regime also constitutes a bargaining chip for the Brazilian government pursuing a broad political agenda — OECD membership among others — that benefit from US backing.


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25/05/09

Brazil's inflation accelerates to 5.53pc in April

Brazil's inflation accelerates to 5.53pc in April

Sao Paulo, 9 May (Argus) — Brazil's annualized inflation rate rose to 5.53pc in April, accelerating for a third month despite six central bank rate hikes since September aimed at cooling the economy. The country's annualized inflation accelerated from 5.48pc in March and 5.06pc in February, according to government statistics agency IBGE. Food and beverages rose by an annual 7.81pc, up from 7.68pc in March. Ground coffee increased at an annual 80.2pc, accelerating from 77.78pc in the month prior. Still, soybean oil prices decelerated to 22.83pc in April from 24.36pc in March. Domestic power consumption costs rose to 0.71pc from 0.33pc a month earlier. Transportation costs decelerated to 5.49pc from 6.05pc in March. Gasoline prices slowed to a 8.86pc gain from 10.89pc a month earlier. The increase in ethanol and diesel prices decelerated as well to 13.9pc and 6.42pc in April from 20.08pc and 8.13pc in March, respectively. The hike in compressed natural gas prices (CNG) fell to 3.5pc from 3.92pc a month prior. Inflation posted the seventh consecutive monthly increase above the central bank's goal of 3pc, with tolerance of 1.5 percentage point above or below. Brazil's central bank increased its target interest rate for the sixth time in a row to 14.75pc on 7 May. The bank has been trying to counter soaring inflation as it has recently changed the way it tracks its goal. Monthly cooldown But Brazil's monthly inflation decelerated to 0.43pc in April from a 0.56pc gain in March. Food and beverages decelerated on a monthly basis to 0.82pc in April from a 1.17pc increase a month earlier, according to IBGE. Housing costs also decelerated to 0.24pc from 0.14pc in March. Transportation costs contracted by 0.38pc and posted the largest monthly contraction in April. Diesel prices posted the largest contraction at 1.27pc in April. Petrobras made three diesel price readjustments in April-May. By Maria Frazatto Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU consults on tariffs for €95bn US imports


25/05/09
25/05/09

EU consults on tariffs for €95bn US imports

Brussels, 9 May (Argus) — The European Commission is consulting on an extensive list, worth €95bn ($107bn), of US industrial, agricultural and other imports that could be subject to tariff countermeasures. The long list includes extends from livestock, biofuels, wood pellets to metals, aircraft, tankers and polymers . The consultation runs until midday on 10 June. It is aimed at stakeholders affected by US measures and possible EU rebalancing measures. Also considered for possible countermeasures are restrictions, worth €4.4bn, on EU exports to the US of steel, iron and aluminium scrap, as well as toluidines, alcoholic solutions and enzymes (CN codes 7204, 7602, 292143, 330210 and 350790). The commission linked the possible new measures to US universal tariffs and to Washington's specific tariffs on cars and car parts. The commission said the public consultation is a necessary procedural step. It does not automatically result in countermeasures. The EU also launched a WTO dispute procedure against the US for Washington's universal tariffs, set at 20pc for EU goods and currently paused at 10pc, and at 25pc on all imports of vehicles and car parts. The commission will need approval by EU governments under a simplified legislative procedure. Officials say this will complete a legal act for the countermeasures, making them "ready to use" if talks with the US do not produce a "satisfactory" result. The list of products potentially targeted includes livestock, along with items ranging from spectacles to antiques. The 218-page list includes a range of agricultural and food products including oats, maize, and cereal pellets. Also included are biodiesel and wood pellets (CN codes 38260010, 44013100), as well as paper and cotton products. Aluminium, iron, steel are listed together with a wide range of other goods from gas turbines, ships propellers and blades, aircraft, sea-going tankers and other vessels. Polymers, copolymers, polyesters and other products are not spared (CN codes 39039090 and more). On 10 April, the EU paused its reciprocal tariffs against the US for 90 days, responding to a US pause. The EU notes that €379bn, or 70pc, of the bloc's exports to the US are currently subject to new or paused tariffs. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

HSFO defies the green tide


25/05/08
25/05/08

HSFO defies the green tide

New York, 8 May (Argus) — High-sulphur fuel oil (HSFO), once seen as a fading relic, is proving remarkably resilient (see table) despite the maritime sector's push toward decarbonization. The fuel remains economically attractive thanks to persistent scrubber investments and regulatory frameworks that fail to fully penalize its use. Under the EU notation, HSFO and very low-sulphur fuel oil (VLSFO) are assigned the same calorific and greenhouse gas emission values. This equivalence means that ships fitted with scrubbers — systems that strip out sulphur oxides — face no additional penalties for choosing HSFO over VLSFO. As a result, greenhouse gas fees under FuelEU Maritime and the EU emissions trading system (ETS) offer no disincentive for scrubber users to stick with cheaper HSFO. In March 2025, the VLSFO-HSFO spread in Singapore narrowed to just $44/t, the lowest since the IMO 2020 sulphur cap took effect. At that level, a scrubber on a capesize bulker pays for itself in under two years. When the spread averaged $122/t in 2024, the payback period was about eight months. Even in regulated markets like Europe, economics favor HSFO. Under the EU ETS, ships operating in, out of or between EU ports must pay for 70pc of their CO2 emissions in 2025. In Rotterdam, bunker prices including ETS surcharges still favor HSFO: $575/t for HSFO, $605/t for VLSFO, and $783/t for a B30 Used cooking oil methyl ester blend. While biofuels, methanol and LNG are inching forward in market share, they remain cost-prohibitive. In the meantime, HSFO, with scrubber backing, continues to punch above its environmental weight. By Stefka Wechsler Selected ports marine fuel demand t % Chg 1Q 25-1Q 24 1Q 2025 less 1Q 2024 1Q 2025 1Q 2024 Singapore HSFO 1.0% 33,160.0 4,898,372.0 4,865,212.0 VLSFO/ULSFO -13.0% -1,005,951.0 6,829,667.0 7,835,618.0 MGO/MDO -5.0% -49,012.0 907,874.0 956,886.0 biofuel blends 187.0% 237,552.0 364,418.0 126,866.0 LNG 34.0% 25,935.0 101,856.0 75,921.0 Rotterdam HSFO 1.0% 11,169.0 829,197.0 818,028.0 VLSFO/ULSFO 14.0% 118,670.0 976,249.0 857,579.0 MGO/MDO 3.0% 9,662.0 393,071.0 383,409.0 biofuel blends -60.0% -158,597.0 104,037.0 262,634.0 LNG 7.0% 7.0 104.0 97.0 Panama HSFO 22.0% 65,266.0 362,388.0 297,122.0 VLSFO/ULSFO 25.0% 177,296.0 878,776.0 701,480.0 MGO/MDO 22.0% 27,097.0 150,980.0 123,883.0 — Maritime and Port Authority of Singapore, Rotterdam Port Authority and Panama Canal Authority Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Bangchak tests runs at Thai SAF plant before 3Q launch


25/05/08
25/05/08

Bangchak tests runs at Thai SAF plant before 3Q launch

Singapore, 8 May (Argus) — Thai energy group Bangchak is conducting test runs at its sustainable aviation fuel (SAF) plant in Bangkok before likely starting regular production in the third quarter, sources close to the company said. The plant, which is also the country's first SAF plant, will have an initial production capacity of 1mn litres/d. It will mainly consume ISCC-certified used cooking oil (UCO) as feedstock for SAF production via the hydroprocessed esters and fatty acids (HEFA) pathway. Other feedstocks could also be explored in the future, company sources said. The plant will also produce byproducts such as bio-LPG and bionaphtha. Its SAF production process was developed in collaboration with Belgian biofuels processing technology company Desmet, which provided feedstock pre-treatment technologies, and US technology firm UOP Honeywell, a pioneer in hydroprocessing systems, according to Bangchak. Thailand is currently considering the introduction of a SAF mandate at a 1pc blend rate from 2026, with proposals to increase this to 3pc in 2030 and 8pc by 2037. But firm details on implementation mechanisms have yet to be announced. Thailand's board of investment in January approved corporate tax exemptions for SAF producers and investors in the country for a period ranging over 3-8 years. Bangchak has already secured offtake for some of its initial production volumes. The firm last year entered an agreement with oil major Shell's Singapore-based subsidiary to supply SAF from its plant. Bangchak also previously signed another supply agreement with Japanese refiner Cosmo Oil in December 2023, but volumes are still under discussion, a company source said. The Argus fob Singapore SAF netback price has been on a downtrend since late last year, reaching a record lows of $1,668/t on 5 March, and also marking the lowest since Argus ' assessments started in November 2020. The price was at $1,682/t on 7 May. By Sarah Giam Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

IMO GHG pricing falls short on green methanol, ammonia


25/05/07
25/05/07

IMO GHG pricing falls short on green methanol, ammonia

New York, 7 May (Argus) — The International Maritime Organization's (IMO) proposed global greenhouse gas (GHG) pricing mechanism might not drive significant uptake of green methanol and green ammonia by 2035, given current market prices. Despite introducing penalties on high-emission fuels use and tradable surplus credits for low-emission fuels, the mechanism does not sufficiently close the cost gap for green alternatives. Under the system, starting in 2028 ship operators will face a two-tier penalty: $100/t CO₂e for emissions between the base and direct GHG intensity limit, and $380/t CO₂e for those exceeding the looser base limit. These thresholds will tighten annually through 2035. Ship operators can earn tradable credits for overcompliance when their GHG emissions fall below the direct limit. Assuming a surplus CO₂e credit value of $72/t — mirroring April 2025's average EU emissions trading system price — green ammonia would earn about $215/t in surplus credits in 2028 (see chart) . This barely offsets its April spot price of $2,830/t VLSFO equivalent in northwest Europe. Bio-methanol would receive about $175/t in credits, offering minimal relief on its $2,318/t April spot price. Currently, unsubsidized northwest Europe bio-LNG sits mid-range among bunker fuel options under IMO's emissions framework. While more expensive than HSFO, grey LNG, and B30 bioblends, the bio-LNG is cheaper than B100 (pure used cooking oil methyl ester), green ammonia, and bio-methanol. To become cost-competitive with unsubsidized bio-LNG — priced at $1,185/t in April 2025 — green ammonia and bio-methanol prices would need to fall by 57pc and 49pc, respectively, to around $1,220/t VLSFOe and $1,180/t VLSFOe by 2028. Unless green fuel prices drop significantly or fossil fuel prices rise, the IMO's structure alone provides insufficient economic incentive to accelerate green ammonia and bio-methanol adoption at scale. By Stefka Wechsler NW Europe, fuel prices plus IMO penalties and credits Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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