<article><p class="lead">Brazil's recent move to reimpose Covid-19 restrictions on movement and increased motorists' consumption of hydrous ethanol are likely to extend a decline in E27 gasoline consumption that began in February. </p><p>Domestic consumption of E27 gasoline totaled 2.7bn l (606,500b/d) in February, an 11pc decline compared with the same month last year, according to data from oil regulator ANP. The reduction is the biggest annual drop in demand since May 2020, when the first round of pandemic-related movement restrictions pushed E27 sales down by nearly 20pc compared with May 2019. </p><p>The drop observed last month is the result of new social distancing measures adopted locally to contain the spread of the virus, as well at the cancellation of the Carnival holiday, generally a boon for gasoline sales, in some states. </p><p>The decline in consumption broke a 5-month recovery between September and January, when E27 gasoline sales grew by an average of 1.6pc each month.</p><p>Demand is expected to remain depressed in March with the tightening of restrictions in large cities and state capitals such as Rio de Janeiro and Sao Paulo, where mayors decided to celebrate some municipal holidays early to contain the epidemic. A reduction in E100 hydrous ethanol prices following the start of the sugarcane harvest in the center-south region should also weigh on E27 gasoline demand while boosting E100 sales, as both fuels compete at the pump. </p><p>Retail sales of E27 gasoline posted the biggest drop among liquid fuels between February and March. Diesel consumption fell by 3.3pc to 4.4bn l in sales in February from a year earlier, and hydrous ethanol sales fell by 7.1pc to 1.6bn l over the same period. </p><p>A consumer shift towards E100 ethanol in February following successive wholesale gasoline price increases by state-controlled Petrobras also curbed E27 gasoline consumption. The price of gasoline at the Paulinia refinery, the country's largest, increased by 19pc through February, finishing the month at R2,521.5/m³(171.8¢/USG).</p><h3>Copape fills void left by retailers</h3><p>Brazil's independent blender Copape continued to expand its presence in the domestic gasoline market in February, the extension of a trend that started in the second quarter of 2020 (see chart). The only active Brazilian blender in the market, Copape accounted for around 7.9pc of market share in February, with a total of 162mn l of gasoline sold to distributors. The Sao Paulo-based company supplied just 0.4pc of the domestic market, around 8.3mn l, in February 2020. </p><p>Copape's expansion runs counter to the shrinking role of distributors in the supply market. </p><p>Gasoline sales from distributors to other retailers reached 54mn l in February, around 2.7pc of the supply market and the lowest level in two and a half years. The reduced role of distributors tracks a decline in imports by the country's three biggest brands —BR, Raizen and Ipiranga — at a time when the arbitrage window remains closed. </p><p class="bylines">By Amance Boutin</p><p><div class="picture"><div><span class="pic_title">Market share by sector</span> <span class="units"></span></div><img src="https://argus-public-assets.s3.amazonaws.com/2021/03/24/20210324marketsharebysector24032021082548.jpg"></div></p></article>
