Rising molasses output lowers Philippine ethanol price

The Philippines' domestic bioethanol reference price fell to 56.05 Philippine pesos/litre ($1,167/m³) in the first half of November, down from P56.27/l in the second half of October and P63.70/l in the first half of November 2019, according to the national Sugar Regulatory Administration (SRA).

Softening feedstock molasses costs on firming output have caused the ethanol ex-mill price to retreat so far during the September 2020-August 2021 sugar crop year from the highs in the previous season. Ethanol values between September and the first half of November averaged 6pc lower than in the same period in 2019 at P57.32/l, and average molasses costs fell by 14pc to P42.71/l.

The Philippines' molasses production rose to 116,000t between 1 September-15 November, up by almost 32pc against year-earlier output, according to preliminary data from the SRA. Officials have praised favourable weather conditions for this crop year's ramp-up in output of sugar and associated by-products, including molasses.

To meet the country's E10 mandate, refiners are obliged to buy volumes of domestic ethanol for gasoline blending as allocated by the department of energy before supplementing with imported fuel-grade ethanol, which typically costs three times less.

Refiners will welcome a weaker ex-mill price. But the slight reduction in allocated domestic volumes for the fourth quarter, which allows cheap imports to make up a greater proportion of the ethanol pool as transport fuel demand recovers, will have a more significant impact.

The Philippines' ethanol imports from the US dropped substantially in the second and third quarters this year as volume requirements faltered during the pandemic. Inflows totalled just 49,000t in April-August, less than half of the 107,00t imported over the same period in 2019, according to the most recent customs data.

By Lauren Moffitt