Brazilian biofuels demand: an interview with Raízen's Paulo Côrte-Real Neves

Paulo Côrte-Real Neves is Ethanol Trading Director at Raízen, the Brazilian sugar, ethanol and bioenergy company. In our interview with him at the World Ethanol & Biofuels conference, we talked about Brazil’s economic recovery and its effects on the ethanol industry, as well as the impact of more muscular US exports.
How do you see the Brazilian ethanol market developing in the short term?
In the short term I would say quite stable in terms of production, in terms of sugarcane availability, things should be keeping the same place as the last two years in Brazilian – so around 650 million tonnes of sugarcane. We have a big question around sugar, so the mix probably in the next year or two could be more towards ethanol than sugar, which is quite different from the previous mix. So this might change a bit in terms of the offering coming from Brazil. But at the same time Brazilian demand is picking up a bit after two bad years of hard economic problems that we’ve been facing, and now things seem to be coming back to a normal condition, and we’re growing again. So at the end, when we put it together, demand and offer, we should be quite stable for at least the next couple of years. After that, thinking a little bit longer term, there’s a good perspective that we may have additional offer coming from Brazil due to all the efforts that the government are trying to make in order to achieve our Paris agreement terms that were signed a couple of years ago here in Europe. So this might promote additional sugarcane production coming from brazil in order to take the space that are done now with more gas imports. So rather than importing more gas, producing more local ethanol.
Where do you see supply gaps in the international markets – any new hotspots?
When it comes to the international market clearly we are seeing the US growing, and showing some surplus in the last couple of years. I think this trend should be steady and staying there for some period. Brazil has a shortage, which seems to be the case for the next couple of years or three. So I think the big question for me over the next couple of years in terms of international trade flows and commerce, is that with the new oil price reality that we are facing now at 60 [dollars per barrel], ethanol turning to be really a competitive alternative in terms of cost. So we should be waiting somehow. Countries in Asia or other transport fuel importers are looking at a solution towards ethanol plans in order to make it more economical for their countries. So I would guess that this would be something that, together with all the growth in production in the US could make a good combination for the future.
Why do you attend the World Ethanol & Biofuels conference?
For me it’s one of the best ethanol events in the world. It’s really great to be here joining people from almost everywhere. So it makes a very good week of meetings and opportunities to be talking about different realities around the world. So when I mean around the world it’s truly around the world – so you have Brazilians, Americans, Europeans (who are generally everywhere when you go for a conference), but we can also see lots of guys coming from other regions as well, in Asia, in Africa, the Middle East – so it’s very complete in this sense, not to mention that the quality of the discussions here are always at the upper level in Europe rather than other places in the world. So it’s very good for us.