Lower biodiesel prices in Brazil are helping to hold down diesel prices at gas stations across the country, which were already under pressure from imports of cheaper fuel, especially from Russia, according to analysts and a producers' association interviewed by Reuters.
With a record soybean harvest in Brazil, industries are counting on lower prices for the biofuel's main raw material, with effects on biodiesel prices. Simultaneously, some producers are competing for market share and sometimes reducing margins, according to a specialist.
S-10 diesel, the most consumed fuel in the country, followed the downward trend this week, being quoted at gas stations at an average of 6.232 reais/liter last Tuesday, according to a Ticket Log survey. In the month, diesel fell 2% compared to the March average, while the decline for the year is about 10%.
"Some factors influence this downward pressure on diesel prices. We observed that biodiesel has decreased by around 35% from a year ago (April 2023 versus April 2022) and… this naturally impacts the blend when analyzing B diesel," said Eduardo Oliveira de Melo, partner-director of Raion Consultoria.
Currently, the biodiesel blend in diesel sold at gas stations is 12%.
StoneX oil and derivatives analyst Pedro Shinzato also commented that biodiesel is contributing to the reduction of diesel prices at the pump, but emphasized that the biggest impact is from the imported product, which is on average cheaper than the price charged by Petrobras at refineries.
This is also occurring, according to specialists, at a time when Brazil has increased diesel imports from Russia, which has been exporting its product at lower prices in the face of European sanctions, which in turn stopped buying Russian fuel due to the war in Ukraine.
The biodiesel producers' association Aprobio drew attention to a drop in biofuel prices of more than 20% year-to-date through the 9th, which meant "the possibility of a greater reduction in pump prices than the exclusive price drop of fossil diesel".
In addition to the large soybean harvest, which accounts for about 70% of biodiesel raw material, biofuel production plants have idle capacity, Shinzato said, which contributes to lower fuel prices.
"The plants prepared in the past for a higher blend (of B15, versus the current B12). The plants have idle capacity today, so it becomes a game of who squeezes margins more to gain market share," Shinzato commented.
The situation in which biodiesel contributes, along with imported diesel, to the reduction of prices at the pump occurs at a time when Petrobras –which accounts for 70% of national supply– has been holding its prices.
According to StoneX, Petrobras would have room to reduce diesel at refineries by more than 50 cents per liter, if it followed the consultancy's import parity calculations. The last time the state company changed diesel prices was on March 23, when it reduced the price by 4.5%.
In regions in the interior of the country, farther from Petrobras refineries, the effects of biodiesel on prices have been especially noticed.
"In the interior of the country, in a soybean-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 agency.
Boutin also commented that "biodiesel is more economical in some producing regions," where S10 A diesel (without biodiesel blend) is the most expensive due to the distance from national refineries.
Credit:
https://www.noticiasagricolas.com.br/noticias/biocombustivel/347160-biodiesel-acentua-pressao-no-preco-do-diesel-do-brasil-ja-em-queda-por-importacoes.html#.ZFGh03bMKUk