Zero Tariff Tightens Brazil's Ethanol Supply Chain

From January 1, Brazilian sugarcane ethanol began to enter the U.S. market with zero tariff, and competed fairly with local corn ethanol. For this historic moment, the Brazilian industry has been looking forward to 32 years, but this instant surprise does not allow them to stretch their brows. Because in the short term, under the effect of favorable exports, the supply gap in the ethanol market in Brazil, which was originally tightly priced, may increase further. The increase in the price of bioethanol used as fuel will make downstream green chemical production more challenging. .

The data released by the Brazilian government on January 11 showed that the decline in sugarcane production in Brazil in 2011 resulted in insufficient supply of ethanol, coupled with strong downstream demand. Brazil unexpectedly became a net importer of ethanol. At the same time, domestic ethanol prices hit a new high in 10 years, and the amount of ethanol imported from the United States also reached a record of 1.1 billion liters, compared with 74.84 million liters in 2010 alone. In 2011, 96.7% of Brazilian ethanol imports came from the United States. At the same time, ethanol exports fell 54.7% to 1.96 billion liters. It can be seen that the sugarcane ethanol price for corn ethanol is much lower than that of the same year, and the tariff of US$0.54 per gallon has lost its significance.

With the cancellation of tariffs, there will be more sugarcane ethanol will be transported to the US market, as fuel to join the car engine, to help the United States to achieve low-carbon growth strategy, which will make the already tight Brazilian ethanol supply chain worse. In order to stabilize the domestic market, from October 1, 2011, the Brazilian government reduced the proportion of ethanol in mixed gasoline sold at auto gas stations across the country from 25% to 20%, thereby reducing the demand for ethanol fuel. Although the proportion of ethanol fuels in Brazil has dropped, the sales of automobiles have been rising. It is expected that this year will maintain its growth momentum and there is still a large room for growth in ethanol fuel demand. Therefore, the pace of rising ethanol fuel prices in Brazil this year is hard to stop.

Rich raw material resources and traditional advantageous industries have laid the foundation for the development of Brazil's green chemicals industry, and gold mining multinational companies have followed suit. Sugar cane-based chemicals have mushroomed and sugar cane ethanol has begun to play a new role. According to the data, ethanol fueled by sugar crops has grown to 2.35 billion liters of non-fuel ethanol in Brazil, driven by the green plastic project, which was only 1.6 to 1.7 billion liters in previous years and is expected to increase to 2020. 5 billion liters. The soaring raw material prices in 2011 have put pressure on the green industry chain with sugarcane as its source. If sugarcane ethanol used as fuel in 2012 can be sold at a good price, the supply of sugarcane ethanol for green chemical raw materials will naturally become more tense and will inevitably cause trouble for Brazil's green chemical industry, which has flourished in recent years.

Since the growth of sugarcane is affected by weather conditions, it is necessary to change the way we rely on heaven to eat, to fundamentally solve the weakness of raw material supply, and maintain the competitive advantage of the green industry chain. Brazil must increase investment in R&D, increase the sugarcane ethanol conversion rate, and let this sugar cane The industry chain really tasted "sweetness." This requires not only relying on national strength, but also the need to strengthen international cooperation and introduce foreign capital and advanced technology.