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Large shipment of US ethanol to be delivered to Brazil in August: sources

https://www.chemnet.com   Jul 24,2014 Platts
The Cavatina vessel has just finished loading 40,000 cubic meters (10.56 million gallons) of US ethanol in Houston, market sources said Wednesday.

The vessel is heading toward Brazil's Suape port in the state of Pernambuco with an estimated arrival date of August 6, data from Platts cFlow vessel-tracking software showed.

There are import tax waivers in place in Brazil's north-northeastern states of Pernambuco and Paraiba until August 15 exempting anhydrous ethanol imports from paying Brazil's ICMS state tax. This period corresponds to the region's intercrop season.

A total of 20,000 cu m of ethanol is expected to be discharged at Suape port, while the remaining volume should head to Brazil's Center-South, or CS, region, sources said.

The cargo was initially expected to hit Brazilian shores in July, but there were delays in loading the shipment due to the large volumes being transported.

"The supply was late to arrive in Houston, the trains did not receive [the product] in the Midwest in time," a trader said.

"It is a lot of volume, you cannot load it all at once," another trader said. "In theory it always does, but in practice it does not."

The business was said to have been booked earlier this year, when several deals were traded for deliveries from January to July.

Ethanol imports in Brazil in the first half of 2014 were almost three times higher than the same period last year at 331,000 cu m, according to data from Brazil's foreign trade secretariat SECEX.

Kingsman, a unit of Platts, estimates 495,000 cu m of ethanol will enter Brazil in 2014.

Looming concerns over the ongoing dry weather in CS Brazil and the extent of damages to this season's sugarcane crop are opening the possibility for increased ethanol imports from the US in the fourth quarter of 2014 and the first quarter of 2015.

The anticipation of tight ethanol stocks during the intercrop season continues to be fed by talk of a possible "sudden death" of the current sugarcane crop in CS Brazil due to extremely dry weather.

Ethanol import discussions for Q1 2015 arrival remain heated, as traders said there are rumors that a small parcel was booked earlier this week for early Q1 2015 arrival.

The latest offer for Brazil's ANP ethanol product coming from the US was heard at $560/cu m for February arrival on a CIF Santos basis.
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