The Philippines' local monthly allocation, or LMA, of domestically produced ethanol for first-quarter 2017, was confirmed Wednesday at 75,835 cu m, trade sources said Thursday.
This is significantly higher than the fourth-quarter LMA of 62,400 cu m and slightly higher from the 74,710 cu m LMA set for Q1 2016.
Supply requirements in the Philippines is estimated at 562,940 cu m for full-year 2017, up 42,560 cu m year on year, according to the Philippines Department Of Energy's Biomass Sector Roadmap 2011-30.
The LMAs are determined every quarter by the Sugar Regulatory Administration after consulting all domestic distilleries that produce fuel-grade ethanol in the Philippines.
Oil companies in the Southeast Asian country are allocated a purchase quota proportionate to their market share in the retail gasoline market, and are required to fulfill the quota before turning to imported product to make up for the shortfall.
For 2017, one more distillery with a 40,000 cu m/year capacity is expected to operate in the Philippines, bringing to a total of 11 plants with an aggregate capacity of 322,000 cu m/year, according to the published Global Agricultural Information Network report on the USDA website. There was concern that the Philippines might reduce ethanol imports due to increasing domestic capacity. However, flat sugarcane production and inefficient milling operations may get in the way of higher domestic production, according to market sources.
"If we have to import feedstock to produce ethanol, why can't we just import cheaper ethanol directly," said a Philippine end-user source.
The domestic price of ethanol in September was around 2.5 times higher than imported fuel-grade ethanol price, according to data from the Philippines' Sugar Regulatory Administration and S&P Global Platts.
The CIF Philippines fuel-grade ethanol marker was assessed at $490.33/cu m on September 30, up $9.33/cu m month on month, S&P Global Platts data showed.
Meanwhile, the Philippines' bioethanol reference price was Peso 59.61/liter ($1,240/cu m) in September.
The Philippines has been strictly enforcing a 10% ethanol blending mandate for gasoline since 2011.
