Imports can hold back investments in biodiesel

Incoming biodiesel imports, still pending review by the National Energy Policy Council (CNPE), which should reconvene on Dec. 18, are not expected to flood the domestic market but may hinder investments in the industry, according to companies heard by Valor press agency.

Erasmo Carlos Batistella, owner of Be8 (formerly BSBIOS), one of the country’s largest biodiesel companies, says that if imports are truly allowed to enter the country, “we will certainly see a retraction in investments.”

This year, the company invested in expanding the capacity of its industrial complex in Marialva, Paraná. In June, Be8 announced up to R$ 1.5 billion to build a soybean crusher next to the biodiesel plant upon completion of the sixth expansion stage, which now stands with a capacity to produce 540 million liters per year.

In addition, Be8 is about to kick off a second investment stage to increase the plant’s capacity in Passo Fundo, Rio Grande do Sul. This investment aims to meet the mandatory production of a 14% to 15% blend, says Batistella.

Olfar, which has three plants in the country, also views the authorization for imports with concern. Mateus Andrich, the industrial director, says the company does not foresee investments in expanding the industry now because 40% of its total capacity is idle.

Meanwhile, Binatural should keep investments flowing. In the last three years, the company disbursed R$ 115 million for its industrial complex in Bahia and R$ 32 million in Goiás. For the next three years, an additional R$ 100 million will be invested, says CEO André Lavor. “Imports do not affect Binatural’s investment plans. We will maintain our commitment to meeting the demand.” According to the executive, Brazilian biodiesel has superior quality and favors small producers.

The National Agency of Petroleum, Natural Gas, and Biofuels (ANP) has limited imports to the 20% that distributors are not required to buy from biodiesel produced with the Social Biofuel Seal and raw materials from family farming.

There is also a market barrier, at least in the short term. Biodiesel produced in other countries does not reach Brazil today at competitive prices. The highest potential supplier in the market is Argentina. However, S&P Global data shows that the product from the neighboring country can reach Argentine ports at $920 per ton, while the Brazilian product arrives at national ports at $1,026.

Despite being $100 cheaper, the Argentine product would still have to bear the cost of nationalization, including freight, nullifying the difference, says Nicolle Monteiro de Castro, a biofuels specialist at S&P Global.

Argentine biodiesel is not competitive even in the Northeast, a biodiesel-deficient region. The product’s value in the port of Rosario, Argentina, is equivalent to R$ 4.70 per liter (FOB), while a recent biodiesel sale contract in the spot market in the Northeast monitored by S&P Global was R$ 4.77 per liter.

The industry fears that opening the window may force national prices down. In addition, the sector already deals with idle capacity. Idleness is at 51% because production this year is expected to be 7.3 billion liters, according to the Brazilian Biofuels Producers Association (Aprobio), and the capacity authorized by the ANP is 14.3 billion liters per year. According to industry representatives, the plants could meet B20 demand, given the current demand.

The mandatory blend is 12%, and the schedule foresees an increase to 13% in March, but the CNPE may vote to advance B14 for next year.

Fuel distributors and importers are opposed to reversing the authorization for imports. On the last day of the 13th, the Brazilian Institute of Oil and Gas (IBP) released a note with other associations in the segment stating that the import regulation followed the analysis and consultation process with society. It said that “untimely changes to a long-debated topic with society compromise regulatory stability and generate market uncertainty.”

Source: Globo Rural

Click here to read the original news piece: https://globorural.globo.com/negocios/noticia/2023/12/importacao-pode-segurar-investimentos-em-biodiesel.ghtml

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