Raízen CEO says Petrobras adjustment was necessary to avoid shortages

The chief executive of Brazil’s Raízen, the world’s largest producer of sugar and ethanol from cane, said this Monday (14) that the increase in fuel prices by Petrobras was necessary to avoid shortages, and said that they could increase further. most.

Hydrous ethanol competes with gasoline to supply the country’s large fleet of flex-fuel cars. The country is not self-sufficient in oil products.

Petrobras raised gasoline prices by 18.8% last week and diesel prices by 24.9%, despite political pressure to contain them. Brazilian President Jair Bolsonaro criticized the increases but said he would not interfere with pricing policy.

“It was a necessary change by Petrobras, otherwise Brazil would have a situation of fuel shortages,” said Raízen CEO Ricardo Mussa, during a break at an event in the sugar sector in the United Arab Emirates.

Without competitive prices, private importers find it difficult to import oil products to help the country guarantee supply.

He added that there appeared to be room for a further increase in fuel prices in Brazil based on the volatility of international markets.

Russia’s invasion of Ukraine on February 24 has led to a rise in global oil prices. They hit their highest level since July 2008 a week ago, but have retreated in recent days.

Mussa said Brazil has traditionally provided a supply cushion for the sugar market in times of scarcity, but strong demand for ethanol would limit the country’s ability to do so in the future.

Global sugar prices rose by more than 20% in 2021, posting a fourth consecutive annual increase, and have continued to rise so far this year.

“Many companies still do not understand how sugar is structurally changing its price because of what is happening globally,” said Mussa, adding that he has not seen additional sugar capacity come on stream, but demand continues to grow.